One vancouver investment advisor has been banned for life after he was found to have duped investors in a Ponzi scheme, and another is under criminal investigation in an unrelated case in which investors say they lost millions of dollars.

On Aug. 11, the Investment Dealers Association of Canada issued a lifetime ban against Brian Bassett, former vice president of Dundee Securities Corp. in Vancouver, after investors lost more than $2.1 million in what Bassett purported to be syndicated mortgage notes.

Meanwhile, Vancouver RCMP is investigating Ian Thow, former senior vice president of
Berkshire Investment Group Inc. in Victoria, after clients lost millions of dollars investing in shares of a Jamaican bank Thow recommended.

In both cases, the investments were “off-book” transactions that were not approved by their firms and, therefore, escaped the attention of compliance staff.

Until he resigned last November, Bassett, 56, had been a broker for 30 years and a prominent figure in the Vancouver securities industry. He served several terms as a governor of the former Vancouver Stock Exchange and headed its membership committee.

In May 2000, he joined Dundee as vice president of trading. By last fall, he was also serving as sales manager, branch manager and retail sales manager for Western Canada. His net income peaked at $503,000 in 2000, then fell to $227,000 the following year and slipped to an estimated $150,000 by last year. This, apparently, was insufficient to support his lifestyle, which included providing his children with flying lessons and financing their efforts to compete on the Canadian Olympic sailing team. “Mr. Bassett appears to have spared no expense for his children and spent far beyond his means,” bankruptcy trustee Gregory Best said in a February report to Bassett’s creditors.

From May 2000 to October 2004, Bassett persuaded 49 investors, many of them Dundee registrants, to buy $2.9 million of what he described as “syndicated mortgage notes.” He operated during regular office hours, soliciting investors from Dundee offices in Vancouver and Toronto, and had assistants prepare promissory notes, letters to investors and other documentation, the IDA says.

Bassett told investors the notes would be used to provide bridge financing for construction projects and would pay 15% annual interest. However, he did not use any of the money for that purpose. When the notes came due, he often advised investors that he had rolled them over for another term or extended the existing term. To repay notes or pay interest, he solicited new investors in what the IDA characterizes as a “Ponzi scheme.”

In November 2004, after Dundee became aware of the scheme, Bassett resigned. He refused to co-operate with the IDA’s investigation or attend the hearing, which was held July 5. In his absence, the panel permanently barred him from working as a broker, fined him $50,000 and ordered him to pay $20,000 in costs. About 32 investors are still owed $2.1 million, but it is unlikely any of his creditors, including the IDA, will collect any material amount. Bassett has been assigned into bankruptcy and is now working as a car salesman with a base salary of $1,500 a month.

Thow, 43, a former bankrupt, joined Berkshire in 1998 and quickly established himself as a high-performing and community-minded salesman who, among other things, served as president of Victoria Crimestoppers. He was given the title of senior vice president and his business card said he was a member of the Berkshire advisory board.

Thow enjoyed an extravagant lifestyle. He owned or partly owned three jets, a US$900,000 helicopter, a $1.5-million Sea Ray boat and a waterfront mansion assessed at $4.6 million. According to former clients, he went on expensive junkets to Las Vegas and the luxurious West Coast Fishing Lodge on Vancouver Island.

On May 31, he suddenly resigned and, within days, investors began filing lawsuits claiming he had induced them to buy millions of dollars worth of shares in the National Commercial Bank of Jamaica. At Thow’s request, the investors paid by cheques made out to Thow personally or to one of his private companies. However, they claim, he failed to deliver the shares or return their money.

Although the bank is 75%-owned by Berkshire’s parent, AIC Ltd. of Burlington, Ont., Berkshire officials say they did not authorize nor were even aware of the investments. They refer to these transactions as Thow’s “outside business activities” and deny responsibility.

@page_break@Other former clients allege Thow talked them into several investments, in which, they claim, they lost most if not all of their money.

Thow has filed a notice of his intention to make a proposal under the Bankruptcy Act.

According to a list of creditors prepared by Thow and his lawyer, he owes $28 million, but many creditors say this significantly understates the real figure. IE