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hiding in plain sight

No one understood how a mutual fund salesman in Victoria could afford a multimillionaire's lifestyle--until he fled the country, leaving behind a trail of lawsuits and creditors who say he defrauded them of more than $32 million

On July 11, 2003, Ian Thow was operating at the top of his game. The gregarious mutual fund salesman seemed to have it made: A senior vice-president of Berkshire Investment Group, Thow owned a $4.6-million mansion; a fleet of cars, including a Hummer, a Porsche Boxster, two Mercedes-Benzes and a Cadillac; and a handful of private jets that could fly him and his clients to exotic destinations at a moment's notice. Victoria's business community marvelled at how quickly he'd risen through their ranks, making a name for himself as a hotshot salesman, community leader and philanthropist, and no one was surprised that he'd positioned himself among the rest of the city's local luminaries as a supporter of one of the city's biggest fundraising events that year, the first annual Courtnall Celebrity Classic golf tournament. The weekend event, a fundraiser for Victoria's Royal Jubilee Hospital, promised to be one of the most star-studded gatherings the Vancouver Island city had ever seen: Notable names on the guest list included former Baywatch vixen Pamela Anderson, superstar music producer David Foster, Nickelback lead singer Chad Kroeger, then-Toronto Maple Leafs coach Pat Quinn and Wayne Gretzky, among others. A media frenzy was descending on the location, the Fairmont Empress hotel on Victoria's waterfront, along with the attendant Hollywood paparazzi, and Thow knew he could count on at least a moment or two in the spotlight. He'd made sure he was more than just another guest at the $300-a-plate gala dinner: As a senior executive at Berkshire, he'd persuaded his firm to sign up as a lead sponsor of the tournament; as an individual donor, he'd pledged $100,000 toward the fundraising efforts, aimed at financing a new emergency mental-health-care centre; and as someone who adored surrounding himself with boldface names, he'd offered the use of his Sea Ray yacht, to ferry celebrities to a private affair at the home of Geoff Courtnall, the event co-ordinator.

Thow had kicked off the fundraising a day earlier, by announcing that he would match donations to the hospital during a local radio call-in show. The gesture raised almost $10,000 over one hour. The next day, he dressed for the gala and joined the celebrity-dotted crowd for cocktails, dinner and a benefit auction.

By 9:30 p.m., dinner was done and all the auction items were taken. Then, a ruddy-cheeked Thow caused a stir in the room by offering a final prize: a trip to Hawaii in his private jet. Once there, guests would stay at the lush Fairmont Orchid. Thow placed one condition on the Hawaiian excursion: a celebrity must accompany the winner. Chad Kroeger volunteered. And as the bidding slowed, actor Kiefer Sutherland said he, too, would join in. The winning bid was $35,000.

It was a typical, attention-getting gesture for Thow, and it upped his currency in the room even more. The following day, the clean-cut businessman played in the tournament at the Victoria Golf Club with an unlikely partner: Pamela Anderson's then-boyfriend Kid Rock, who was swilling beer and dressed in a tank top and John Deere cap.

If Victoria's chattering classes needed any further evidence that Thow was a player, they got it during the year that followed, as his high-flying ways and philanthropic gestures became the stuff of local legend--and headlines: Thow donates $500,000 to the Royal Jubilee Hospital in honour of his late mother. Thow raises $2 million for the Greater Victoria Police Foundation. Thow spearheads a $1.1-million fund at Royal Roads University, paying tribute to friend and client Alex Campbell Sr., founder of the Thrifty Foods supermarket chain on Vancouver Island. Thow purchases art, feeds the homeless and offers his jets to fly sick Vancouver Islanders to U.S. and Vancouver hospitals.

A regular at pie-throwing events and head-shaving fundraisers, Thow was also a featured ambassador in literature distributed by the city-owned Victoria Conference Centre and a model citizen who represented his hometown at international Crime Stoppers events. So it came as a major shock to many when, on Sept. 8, 2005, at 1:30 a.m., Thow fled Canada, crossing the border into the United States at Blaine, Washington, with a flourish of his U.S. birth certificate, just ahead of pursuing RCMP. Left behind were 73 former clients and friends--who claim he ripped them off for more than $32 million--and a growing pile of lawsuits.

The B.C. Securities Commission is due to release the results of its two-year investigation next month. If the clients' allegations prove true, Victoria residents will finally have an answer to the question many have been asking themselves all along: How could a mutual fund salesman in a second-tier market afford such an extravagant lifestyle?

Born in 1961, in Glendale, California, Thow moved with his family to West Vancouver in 1969. His first significant work venture, a travel agency he launched when he was in his early 20s, went bankrupt in 1986. According to the Office of the Superintendent of Bankruptcy, he cited liabilities of $362,658 against assets of $14,300. He was discharged in 1987 and, the next year, he became registered as a mutual-fund salesman at Investors Group. The fledgling employee advanced quickly: After six years, he was appointed regional manager for Victoria. The position carried authority, prestige and a healthy remuneration--including overrides, salary and his own commissions, a former associate estimates Thow was earning in excess of $600,000 a year by the late '90s. But as the years passed, Thow became frustrated with the firm's management and, in particular, a company policy change that stripped regional managers of their client books, putting them on salary. To keep his roster of clients in the family, Thow's wife, Teresa, joined Investors in November, 1996, taking up his list of accounts.

Two years later, the couple left the company to establish the Victoria office of Berkshire, a move that soon led to litigation: Investors Group alleged breaches of confidentiality and fiduciary duty against Thow. In its statement of claim, company representatives said Thow had failed to execute trades for 57 clients on July 15, 1998. Cash was supposed to have been moved to money market funds as world markets went into a nose-dive. Investors Group also alleged that Thow and his wife were actively recruiting their clients to follow them to Berkshire.

The Thows denied the allegations in a statement of defence, blaming the unexecuted trades on administrative errors and claiming the lawsuit was sour grapes meant to embarrass them. The case has remained inactive since 2001 and didn't appear to damage Thow's credibility: Soon after leaving Investors Group, his career appeared to take off. He began living the life of a big man about town. His 6,463-square-foot mansion, near the poky village of Brentwood Bay on the south island, was built by renowned West Coast builder Tim Hackett; the mansion's muscular cedar beams lift vaulted ceilings, and rough-honed stone, quarried from the building site, ties it to the cliffs and cozy bays of the Saanich Peninsula.

Thow enjoyed gazing out of the mansion's floor-to-ceiling windows, over the $100,000 wharf where he moored his $1.5-million Sea Ray yacht. But most of all, he liked drinking, getting red in the face and telling his frequent house guests about his great wealth, accomplishments and A-list friendships--his circle of companions included professional hockey players, property developers, rock stars (Chad Kroeger and actor Patrick Duffy were regular visitors) and successful entrepreneurs such as video-game wunderkind Don Mattrick. Celebrity companions often joined him for gambling and drinking junkets in Las Vegas, salmon fishing in the Queen Charlotte Islands or boozy weekends in Jamaica or at Vancouver's Fairmont Hotel.

At 6 feet 3 inches and well over 200 pounds, Thow was a big man who carried himself big--with squared shoulders and chest out, he greeted people with a hard handshake and a whack on the back. His larger-than-life reputation, however, repelled as many as it attracted. "He was vulgar, arrogant and he turned many people off," says one Victoria business executive, referring to Thow's flashy lifestyle. "Still, many successful, accomplished people had time for him and invested with him. I guess it was the excitement and sense of adventure and success that attracted them."

Victoria stockbrokers, bankers and mutual fund salespeople, knowledgeable about industry compensation and earning potential, shared a dour fascination for their Berkshire colleague, whose grand displays titillated and fuelled water-cooler chatter. Many had heard about how he maintained a fleet of jets, a helicopter, a yacht and a mansion on the salary of a mutual fund salesman. Few, if anyone, knew how Thow was doing it.

Former clients and associates agree, however, that he had an uncanny ability to coolly and quickly size up a person and determine what type of investment opportunity would appeal. To Shirley Garwood and Helena Kells, a pair of elderly Vancouver Island sisters, Thow was the kid who cut the old people's lawns, who had grown into a warm, empathetic man. The young, handsome salesman enchanted the sisters, who he referred to as his "favourite ladies," sweeping them into his big arms and showering them with kisses. The sisters cherished the attention. He was everything that was right: a loving father of four, a member of Victoria service clubs, a man whose charitable acts were seemingly never-ending.

"He was always coming to our house for visits," says Garwood, who lives with her sister in North Saanich, a municipality north of Victoria. "He pretended he cared about us and would look out for us."

Thow had managed their money since his days at Investors Group. When he left to join Berkshire, they transferred their accounts. In 2004, however, the sisters--who live on fixed incomes and have a low risk tolerance--grew alarmed after several of their mutual funds tanked. Thow offered them a surefire way to recoup the losses: short-term, 10% mortgage loans to real estate developers. Carrying little risk, the investment would be money in, money out, he said. Best of all, he would personally look out for them and make sure they were protected.

The fact the sisters had little cash on hand did not matter: Thow told them to liquidate their Berkshire account and cash in their RRSPs. Leaving no asset unturned, he explained to the sisters how they could borrow against their house. He even helped them arrange a line of credit at Scotiabank. After several friendly visits, the sisters handed over most of their money to their "trusted friend," writing $465,000 worth of cheques to Thow and his companies. Soon after, however, their frequent guest became scarce.

While his winning personality and financial smarts won over many investors, others were beguiled by his lifestyle and high-profile connections. Daryl Goodwin, a farmer and commercial pilot from Richmond, B.C., ran into Thow at a Vancouver Canucks hockey game. Goodwin knew Thow from the late '70s, when they both attended a Richmond flying school. It was the first time Goodwin had seen his former friend in almost a quarter century, and he was impressed by his apparent success.

Thow stayed in touch with Goodwin and eventually renewed his acquaintance with his family--Daryl's brother Brad and parents, Don and Anna Goodwin. In the spring of 2003, he connected with them again at an event he'd helped organize. "Spend an Evening with a Billionaire" featured a keynote address by Jamaican-born Canadian billionaire Michael Lee-Chin, whose company, AIC Ltd., owned Berkshire. Daryl and Brad Goodwin attended as Thow's guests, listening to Lee-Chin discuss his investment philosophy and his recent purchase of a 75% stake in the National Commercial Bank of Jamaica.

After the event, Thow worked his magic on the family, ingratiating himself through friendly overtures: He flew the elder Goodwins to Phoenix on his private jet, and then to Calgary and Vancouver Island. "He flew us over to Victoria, and his secretary...picked us up. We met Ian's wife, Teresa, and the kids; we had a tour of Berkshire and his house," says Anna Goodwin. "He used everyone around him."

Then Thow offered up an investment opportunity that appears to have been a favourite of his: He told the Goodwins he was promoting National Commercial Bank of Jamaica stock. His own investments in the bank were underwriting his success, he said, and they, too, could own "special preferred shares," as long as he purchased and held the shares in trust for them. The Goodwin family eventually agreed to move their portfolios to Berkshire. Thow's assistant, Marilyn Moss, helped prepare the documents, and Thow's banker of choice, Dalene Paine of Scotiabank, arranged a line of credit against their homes.

In early April, Thow asked Brad and Daryl to meet him at the Vancouver International Airport, where he greeted them with unexpected news: "Thow came bombing into the Aerocentre in his helicopter, all by himself," says Brad. "He was just bouncing, he was wired. Then he said: 'You guys are in.'"

"In what?" Brad asked. "In the Bank of Jamaica," Thow said. "And since I talked to you last, you've made $40,000."

The brothers were surprised but excited at what Thow seemed able to do for them, and their family eventually gave him $2.5 million to invest on their behalf in the Jamaican bank. That December, Thow invited the Goodwin brothers to join him in Jamaica to check on their investment and to enjoy the Caribbean. The three flew there in Thow's Citation X, and during the flight, they glimpsed a different side of his personality.

"On the flight down he was really upset," says Brad. Thow had told them they'd be staying at a seaside villa in Montego Bay that he'd received as a reward for working on the Jamaican bank deal with Lee-Chin, he says. "He wanted to stay at his villa, but someone else had his cook and his servant. He started yelling into his phone: 'I am Ian Thow. I am coming to my place. Make sure everybody is ready for me when I get there.'" In the end, the "villa" they arrived at did have a cook and a maid, but it turned out to be a suite at a resort.

The brothers visited the Half Moon Bay branch of the Jamaican bank with Thow, who was followed by a bodyguard whenever he stepped out. The rundown, yellow stucco building, next to a mall, underwhelmed the brothers. However, Thow seemed acquainted with the staff: "They knew him at the bank. We walked right in and the tellers and the manager greeted him," said Brad. "We walked behind the counter and Ian introduced us to the manager as investors in the bank."

Then Thow did something that struck the Goodwins as truly bizarre. According to Brad, Thow told the brothers to wait in the van while he walked around the corner of the bank with his bodyguard. Five minutes later, he hopped back into the vehicle. "When he was back, he was holding a huge roll of U.S. dollars and began peeling them off," says Brad. Each person on the flight would carry $10,000 (U.S.) back into Canada--the maximum amount not requiring a declaration at the border. Brad asked where the money had come from, and Thow said the manager had loaded the bank's ATM so he could make a withdrawal. "He told us he did it every time he was in Jamaica."

The Goodwins returned from the trip feeling perplexed. On the one hand, Thow appeared to be a roaring financial success: He had ties to the Jamaican bank and was an executive with Berkshire who enjoyed a great reputation in Victoria. On the other hand, he had yet to produce documents detailing their preferred stock holdings in the Jamaican bank, and his stories were getting outlandish--Forbes magazine was supposedly preparing to profile him in an upcoming issue--and his behaviour was running contrary to the conservative, family-man image he had presented at first. He was drinking a lot, they say, and smoked marijuana while in Jamaica.

Brad says his worst suspicions were confirmed in April, 2004. He and his wife, Gina, had been planning a trip to Africa--Thow encouraged his clients to live life to the fullest, often telling them, "This is your money. Enjoy it." The Goodwins figured they could pay for the adventure by cashing out $50,000 from their apparently ballooning investment in the Jamaican bank. After weeks of missed and cancelled appointments, they eventually met Thow at the Vancouver airport a few days before their scheduled trip. Thow gave Brad a cheque drawn on a credit union account. "He told me there was $450 million (U.S.) in the account." The cheque bounced.

On April 10, Thow, blaming the credit union for shoddy service, wrote another cheque. It cleared at 11 a.m., April 12--five hours before the Goodwins left for Africa. "I was sweating," says Brad. "We get on the airplane and I look at my wife and we say, 'This is a scam.'"

The Goodwins, who, soon after their trip began asking for their money back, weren't the only ones raising questions about Thow's business practices. In September, 2004, Berkshire's compliance department received an angry phone call from one of Thow's acquaintances: Lou Vavaroutsos, owner of Old Mill Pontiac Buick in Toronto and East Side Chevrolet in Markham, Ontario. Vavaroutsos told the Berkshire staff that Thow had invited him and a group of car dealers to go salmon fishing on the West Coast. During their time together, he'd sold his guests shares in the Jamaican bank. Vavaroutsos said he and others each handed over between $750,000 and $1 million. Thow had failed to provide transaction documents or certificates, however, and the Toronto businessman wanted his money back.

Soon after, Thow called Berkshire's compliance department to plead his own case. He said the money the car dealers had given him was for blocks of air time on his jets, which he leased for charter flights through a company he'd established--not for shares in the Jamaican bank. Telephone conversation notes taken by Berkshire's compliance department include Thow's assertion that he "would never put himself, the firm or Michael Lee-Chin at risk by dealing in the Jamaican bank."

Berkshire management was well aware of his airplane dealings, noted Thow, and that his company, Van Isle Jet, was in his wife Teresa's name. He added that he was thinking about "hanging up" his Berkshire business and selling his book to branch manager Richard Burke.

Not long after, the complaint evaporated: Vavaroutsos called back "to say it is a misunderstanding," according to the compliance department records, and that Thow was a personal friend and he intended to do business with his aircraft company. Contacted recently, Vavaroutsos refused to comment, saying only that "the chapter is closed."

Julie Clarke, general counsel for the Berkshire Group of Cos., responded to questions about the incident in writing, asserting that "Mr. Vavaroutsos was not, in September, 2004, nor at any other time, a client of Berkshire." The episode "is currently the subject of investigation and, as a result, Berkshire is unable to provide specific details."

A sworn affidavit by branch manager Burke in relation to a lawsuit launched by Nanaimo, B.C., businessman George Thomson, who claims Thow sold him $686,000 worth of Jamaican bank stock, suggests there were indications of unusual activity in Thow's client base at the time. A growing number of clients were cashing out their Berkshire accounts. According to Burke's affidavit, between 2004 and 2005, Thow's assets under management were declining faster than those of any other financial adviser at the branch.

Undeterred by the Vavaroutsos close call, Thow focused his attention on other potential investors. Pilot Richard Lorette flew the 1979 Cessna Citation II jet that Thow had purchased in 2003 for $3 million. Wanting to share in some of the fund salesman's apparent success, he and his wife, Cathie, had transferred their $240,000 investment portfolio to Thow's care at Berkshire. Lorette had been particularly impressed by Thow after flying him to Omaha, Nebraska, home to Warren Buffett--the world's most famous investor--and his company, Berkshire Hathaway. "Ian said Berkshire was associated with Berkshire Hathaway and Mr. Buffett," says Lorette, and the trip was for Thow to meet with management of the company.

The Lorettes' money went into a variety of low-risk mutual funds, and while the account was being set up, Lorette mentioned that if Berkshire ever went public, he'd like to invest.

"We weren't interested in the mortgage scheme or the Bank of Jamaica," says Cathie, "but Ian could remember things and he remembered we were interested in a Berkshire IPO."

During a chance meeting at the Victoria airport in 2004, Thow surprised Lorette with news that Berkshire was going public, and offered to purchase and hold the shares in trust for him. Soon after, Thow cashed out $197,000 from the Lorettes' Berkshire mutual fund accounts.

"He moved the money before he had both of our permission," says Cathie. The couple protested, and Thow eventually moved her half of the money back. Later, however, Richard Lorette wrote two cheques for the IPO, totalling $120,000, one payable to Thow and the other to A.Y.G., Thow's private company.

If anything was amiss in Thow's life at the time, the man himself didn't reveal any sign of it. The only obvious indication of upheaval was in his personal life: He divorced Teresa in late 2004 and married Alyssa Fritz, daughter of Mike Fritz, one of his pilots. But he kept on living the high life. "Thow was putting on the façade that things were even better and greater," Lorette says. To drive the point home that he still had access to high-end toys, Thow offered Lorette and a number of his friends a ride in a $35-million Global Express corporate jet, explaining that he'd had Bombardier send it out from Montreal. Thow and some friends later took the jet, which has a cruising speed of mach 0.87 and a 5,450 nautical-mile range, to Fiji. According to Lorette, Bombardier pilots flew the plane.

The next time the Lorettes heard from Thow was when they received a letter from him in June, 2005, advising them he was leaving Berkshire.

Within weeks, Thow's world had collapsed under the weight of at least four lawsuits and the allegations of furious investors, most of whom learned he was leaving the company through his boilerplate letter. Attempts to reach him at home failed, though many suspected he was holed up in his mansion.

Thow filed for bankruptcy protection that summer, as complaints against him mounted. At least one group of former clients, the Goodwins, had received a payment of $1.4 million from him in response to the lawsuit they'd initiated, but most were forced to wait for the former businessman's proposal to creditors, which he made in late August. The terms offered the proceeds of the sale of his remaining assets (primarily his North Saanich home) and an additional $5 million from an unnamed, mysterious benefactor. Creditors were scheduled to vote on the proposal at a meeting on Sept. 12.

By now, the B.C. Securities Commission, the Mutual Fund Dealers Association and the RCMP's Integrated Market Enforcement Team (IMET) were all investigating Thow, and the RCMP had asked U.S. border officials to advise them if he attempted to leave Canada. Early on Sept. 8, the American officials did, but the officers didn't make it to the border on time.

Four days later, creditors convened at Victoria's Hotel Grand Pacific to vote Thow into bankruptcy. Thow did not attend the meeting. But the group caught a glimpse of how their money funded the controversial fund salesman's profligate lifestyle. Bank records spanning Jan. 1, 2003, to June 30, 2005, show Thow took $7,150,195 from the five companies to which he had clients write investment cheques. His personal expenses during that time amounted to $1.4 million and reflected his extravagant style: $145,313 in dining expenses, $826,079 in travel, $100,546 in jewellery, $137,963 in clothing, and $180,487 in home furnishings. The Berkshire executive relied on approximately 60 accounts at Canada's major banks and with credit card companies to move, shuffle and hide money, bankruptcy trustee Michael Cheevers told creditors at the hearing. Cheevers also said Thow, during regular jaunts to the U.S., made a habit of withdrawing and carrying exactly $10,000 in cash and, over the same 30-month period, rang up $428,893 worth of cash advances on assorted credit cards in or around U.S. casinos.

Concerned about the unusual activity in the accounts over the years, some banks became "uncomfortable" dealing with Thow and asked him to take his business elsewhere. According to Cheevers, in the midst of one of several account transfers, the fund salesman made eight separate $99,999 deposits in a single day at a Scotiabank ATM.

During the weeks that followed, Thow's philanthropic façade was also torn down. Victoria police chief Paul Battershill said the purportedly charitable businessman did not, as reported, raise $2 million to fund the police foundation. The hospital's foundation received nothing after Thow's $500,000 pledge in the memory of his mother--a gift that he told a Victoria newspaper was "fulfilling a commitment to a dream she had." The only benefactor from these and other conspicuous displays of sham generosity appeared to be Thow himself--it brought him close to people with money. One of his most profitable ventures involved Royal Roads University, which admitted it received only $77,000 of the $1.1 million Thow promised. Meanwhile, Alex Campbell Sr., the fund's honouree, claims Thow took him for $12 million, making him Thow's single-largest creditor.

More stories of Thow's controversial activities emerged this past June when a sad parade of creditors filed through the Vancouver offices of the B.C. Securities Commission (BCSC). Appearing before a hearing panel of regulators and lawyers investigating their allegations, the former clients detailed their stories of loss and described how Berkshire's former superstar adviser had wrecked their lives.

As well, forensic accountant James Blatchford claimed to have untangled Thow's financial labyrinth even further when he presented a 1,500-page report that showed with flow charts and diagrams how the businessman moved investors' money to personal accounts, spousal accounts, leasing companies, realtors, credit cards, auto and airplane dealers and even to other clients, in a frantic attempt to keep his scheme afloat.

"Thow was, or at least became, a predator," said BCSC prosecutor Doug MacKay in his closing statement. "[He] intentionally and systematically stole millions of dollars from his clients, many of whom were elderly and apparently vulnerable to Thow's apparent charms."

Since the allegations came to light, Thow's former clients have battled Berkshire in the courts and in the press. The company now faces approximately 10 lawsuits, and Thow is named in at least 15. Some of the clients, including sisters Shirley Garwood and Helena Kells, were offered mediation by Berkshire. According to Julie Clarke, 15 mediations with 26 individuals who ostensibly invested in syndicated mortgages were held over a two-week period in March and April, 2006, with former B.C. Attorney-General Geoff Plant as mediator. "Every one of those mediations resulted in a successful resolution. Since that time, Berkshire has completed settlements with additional clients in similar circumstances," Clarke adds.

Berkshire continues to deny any knowledge of Thow's activities relating to the Jamaican bank, however, and has vigorously fought claims related to it, arguing that the transactions were conducted "off-book" and, therefore, beyond the scope of Berkshire's compliance department. During the summer of 2005, Berkshire asserted in full-page ads in The Globe and Mail, National Post, Vancouver Sun and the Victoria Times Colonist that Thow had no business relationship with Lee-Chin in connection with the bank and was not authorized to sell shares.

The furthest along and most significant Thow/Jamaican bank-related lawsuit against Berkshire is the one filed by Nanaimo businessman George Thomson at the Vancouver courthouse. The file makes for excruciatingly painful reading: Over several thousand pages of court applications, orders and sworn affidavits, Berkshire's lawyers and staff appear to drag their feet and avoid answering questions--at one point, Berkshire claimed it was unable to locate several years' worth of T4 forms it issued to Thow.

In January of this year, an exasperated Justice R.B.T. Goepel rebuked Berkshire for its stymieing tactics: "Berkshire's failure to comply with the rules of court and various court orders made during the course of this application is not acceptable."

Some of the clients who settled with Berkshire are now going after Scotiabank, complaining that the bank didn't follow proper procedures when granting lines of credit and loans, often against mortgage-free homes. Some have also questioned the behaviour of Dalene Paine, the bank officer who approved many loans to Thow clients. Paine, who has been named in a statement of claim by Paul and Beverley Haley, long-time former clients of Thow's, quit as a Scotiabank branch manager in March, 2005. Two months later, she joined Thow's Berkshire office as a salesperson. Paine's Berkshire-sponsored BCSC registration was terminated July 13, 2005, soon after Thow quit; she is now a mortgage broker with Verico Select Mortgage.

Bruce Cameron MacLeod, another former Scotiabank branch manager whom Thow's clients dealt with, appears on Thow's list of creditors, claiming $100,000. MacLeod's Scotiabank BCSC registration was terminated a few days before Paine's departure from the bank. He too is now a broker with Verico. Neither MacLeod nor Paine returned calls.

As for Thow, he now lives in Seattle, where he reportedly works as a mortgage broker--and, for the most part, has been able to avoid market regulators, creditors' anger and calls from the media. (His listed number has been disconnected, and several other numbers given to former clients are no longer in service. Calls to Larry Feinstein, his most recent lawyer of record, were not returned.) Thow's home is in a tony Seattle condo complex, just north of the famous Pike Place Market and the city's downtown core, and he keeps a low profile. However, he has been forced to come up for air on occasion.

On July 17, 2006, a tired, pasty and considerably paunchier Thow was dodging news cameras and reporters on the steps of the King County courthouse in Seattle. Earlier that month, he had been arrested and charged with assault, interfering with reporting domestic violence and harassment after a dispute with his wife, Alyssa. Thow entered into a plea agreement that required drug and alcohol counselling, domestic-violence counselling and compliance with a no-contact order. He was also placed on probation for two years.

Thow's first wife remains in Victoria with their children. She has returned to nursing, the profession she'd pursued before joining Investors. Asked about her time with Ian, and in particular their days of helicopters on the lawn and jets in the hangar, Teresa Thow carefully suggests she knew nothing about her former husband's dealings. She contends that most of the alleged fraud and excess occurred after their estrangement.

Meanwhile, some of Thow's former clients suspect sabotage from within their own ranks as they combine forces to recover their money and see Thow brought to justice. After the September, 2005, meeting, when creditors voted Thow into bankruptcy, the claimants formed a support group. Its high-water mark was on Feb. 2, 2006, when members met with Lee-Chin at Victoria's Empress Hotel and Berkshire announced it would enter into mediation with some of Thow's former clients.

However, shortly after the closed-door mediation with Berkshire concluded in spring, 2006, Thow began calling from Seattle and taunting his former clients. "He [Thow] said, 'You must be really happy,'" a puzzled Shirley Garwood reported after receiving a call. Asked why, Thow replied, "Because you settled with Berkshire, and did you know you can thank me for that?"

Thow also called 86-year-old Ron Black of Victoria, a $700,000 creditor, who settled with Berkshire. In both cases, Thow appeared to know details of the settlement and the names of the individuals Berkshire engaged with in mediation. Most disheartening to group members, though, was a recent revelation that the de facto leader of the creditor group, Tom Harris--owner of Tom Harris Chevrolet dealership in Nanaimo, and Tom Harris Cellular, a dealership with outlets throughout Vancouver Island--had been sending money to Thow in Seattle, as had Alberta farmer and creditor Kevin Prins. Cheevers, who discovered the fund transfers, refused to speculate on why the money was sent south. Harris, who lost $820,000 to Thow, spoke at length in an interview but declined to comment on the record. Prins did not return calls.

The BCSC will release its decision on Oct. 9. The strongest penalty the regulator can issue is a $250,000 fine and a lifetime ban from selling securities in B.C.

As for the RCMP and the prospect of criminal charges, in mid-July, Inspector George Pemberton, the officer in charge of the Vancouver IMET unit, said "significant progress has been made." Investigators have examined more than 40 bank accounts and traced over $20 million, though Insp. Pemberton said the process has been delayed by banks that refused to provide information, and by witnesses who have not co-operated. He wouldn't say when findings would be forwarded to the Crown.

The Mutual Fund Dealers Association of Canada is still investigating Thow. Enforcement head Shaun Devlin says the self-regulating organization can fine, suspend, terminate or put terms and conditions on Berkshire's licence.

Meanwhile, Manulife Financial Corp. has announced plans to acquire Berkshire's 237 mutual fund and securities dealerships in Canada. The deal, expected to close by Aug. 31, adds extra anxiety for former Thow clients, who feel Berkshire, market regulators and law enforcers have left them twisting in the wind. Some worry the allegations concerning Thow will simply be swept aside.

Sisters Shirley Garwood and Helena Kells speak for many of Thow's former clients when they express amazement that Thow continues to live in a luxury condominium overlooking Puget Sound and is able to taunt them over the phone. "Isn't anything going to happen?" asks Garwood. "Isn't anyone going to do something about Ian Thow?"

Some have tried, but their progress isn't promising. In July, bankruptcy trustee Cheevers applied to have Thow appear in a Seattle court, where he would be required to answer questions about where he's working and how much money he's earning, and to fulfill the obligations he agreed to under the 2005 bankruptcy process. Arguing that the answers could be used as evidence to convict him of a criminal offence, Thow pleaded the Fifth Amendment.


O Brother, where art Thow?

Ian Thow isn't the only member of his family who has run afoul of investors. His brother, Phillip, also worked at Investors Group during the 1990s--as a regional manager in the company's Vancouver office--and also left his job after complaints from unhappy investors.

According to a Vancouver Sun report in 2005, Phillip Thow persuaded co-workers and clients to loan him money to invest in Seattle heritage properties. Instead of investing the money, Thow spent it gambling in Las Vegas, and buying designer clothes and jewellery. Sun writer David Baines reported that after leaving Investors Group, Phillip Thow filed for bankruptcy in August, 1996, declaring $82,500 in assets against $1.14 million in liabilities. He later moved to Washington state where he again apparently ran up debts and declared bankruptcy.


White-collar-crime blues

In Canada, where regulators deal with a patchwork quilt of market and law enforcement rules, disciplinary measures aimed at preventing white-collar crime can vary from province to province--and industry to industry.

In October, 2002, the self-regulating Investment Dealers Association formally adopted its much-ballyhooed "Policy 8," which set minimum reporting requirements for registrants. It meant brokerage compliance departments were required to submit to the IDA, among other things, all customer complaints that are not service-related; securities-related civil claims and arbitration notices; internal disciplinary actions and internal investigations of theft, fraud, misappropriation of funds or securities, forgery, money laundering, market manipulation, insider trading, misrepresentation or unauthorized trading.

Prior to its adoption, brokerages were responsible for vetting compliance and complaint information. Often, the primary goal was to secure a non-disclosed settlement with aggrieved or allegedly wronged investors, which allowed for the burying of possibly serious infractions. Meanwhile, unscrupulous brokers were free to move between firms.

As a mutual fund company, Berkshire doesn't report to the IDA. However, in B.C. it does fall under the auspices of the oft-maligned British Columbia Securities Commission, which for years has been slated for reform. Proposed changes to B.C.'s Securities Act--developed over four years and at a cost of $5.5 million--would have put a bigger cudgel in the hands of the commission and courts when dealing with white-collar crime and market malfeasance. Under the new Act, the commission would have been authorized, for the first time, to order disgorgement of ill-gotten gains; the maximum fine a provincial court could order would have increased to $3 million; and investors would have been given broader rights to sue.

Rather than being a regulatory lone wolf, however, B.C. opted to forgo the planned changes in February, 2006, and instead work with other provinces and territories to develop the so-called passport system. The goal: consistent rules in all Canadian jurisdictions. Meanwhile, however, for regulators and law enforcement officers, the legal environment is the same old, same old.

© 2007 The Globe and Mail. All rights reserved.

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