BCSC panel finds Ian Thow guilty of fraud

High-living former Berkshire advisor Ian Thow defrauded his clients of millions of dollars, concluded a British Columbia Securities Commission hearing panel.

Between January 2003 and May 2005, Thow, working as a mutual fund salesperson for Berkshire in Victoria, took money his clients trusted him to invest and instead spent it on his own lavish lifestyle, which included numerous luxury vehicles and his own private jet.

The panel’s decision was based on the submissions of 26 of Thow’s former clients, who collectively invested $8.7 million primarily in construction loans and shares of a Jamaican bank. Thow advised some to sell their mutual funds and to mortgage their homes to raise the money, the panel said.

The construction loans and the shares never existed. The clients lost most or all of their money — the panel estimates $6 million in total.

That figure accounts for only 26 of Thow’s clients; the panel notes he had hundreds of other clients. The extent of Thow’s fraud could be in the tens of millions of dollars, according to reports in the press.

“This case represents one of the most callous and audacious frauds this province has seen,” the panel said. “Thow preyed on his clients by offering them non-existent securities and instead using the funds to support his lavish lifestyle. He took their money and betrayed their trust. He has left a trail of financial devastation and heartbreak.”

The panel found that Thow established trust with clients through his “high-profile support of charitable and community causes, his show of wealth, and his apparent close relationship with Michael Lee Chin, the principal of Berkshire.”

Thow gained particular notoriety for offering clients preferred shares in National Commercial Bank Jamaica Limited, which he said Chin had a controlling share of and was actively promoting the business of. The panel found the preferred shares did not exist.

Also non-existent were construction loans secured for clients whose mutual funds had fallen in value. Thow told the clients they could expect returns ranging from 32% to 192% on the loans, thereby recovering their losses and then some. He claimed the investments were safe because they were secured by mortgages. The panel found no evidence of the loans’ existence.

The panel noted Thow offered one client shares in an upcoming initial public offering by Berkshire, which never had any plans for an IPO.

As a result of investing with Thow, the panel said, retired couple clients lost their retirement funds, and other clients now find themselves in financial difficulty. It also added that clients continue to suffer stress, anxiety, depression, and other health problems.

No sanctions have been announced, but the panel has asked for submissions from parties affected by Thow’s fraud.

The BCSC did not reveal how it would impose those sanctions on Thow, nor did it mention his whereabouts. Other sources have reported that he is bankrupt and living in Seattle, Washington.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com