TORONTO (Reuters) - A former mutual fund salesman in British Columbia who was found guilty by regulators of committing fraud has been fined C$6 million ($6.1 million) and banned from working in the West Coast province’s capital markets for life.
Ian Thow, who was branch manager of the Victoria, B.C., office of mutual fund dealer Berkshire Investment Group, cannot trade securities or act as a manager or consultant in the securities market, the British Columbia Securities Commission said on Friday.
The commission said in October that Thow’s case “represents one of the most callous and audacious frauds this province has seen,” and it used new legislative amendments to increase the penalties against Thow, who bilked clients out of millions of dollars and spent it on luxury goods and personal expenses.
Thow is also prohibited from being a director or officer of any issuer, registrant or investment fund manager, and from acting as a promoter
or investor relations adviser.
“Thow’s conduct shows he is not fit to participate in our capital markets,” the B.C. Securities Commission said.
It’s unclear whether the C$6 million fine will ever be collected, however.
Thow is reported to be living in Seattle, Washington, and was petitioned into bankruptcy in 2005.
“We’re going to aggressively pursue collection, but it (the fine) is subordinated to any investor claims,” Lang Evans, the BCSC’s director of enforcement, told Reuters. “We don’t want any of this money paid to us ahead of any amounts that are due to his victims.”
If Thow is penniless today, and evidence points in that direction, “we will keep him broke,” Evans added.
In October, a commission panel found that Thow defrauded hundreds of clients between January 2003 and May 2005, convincing some to sell their mutual funds and mortgage their homes to raise money to invest in construction loans and a Jamaican bank. Neither investment existed. Another client was offered shares in an upcoming Berkshire initial public offering, but no IPO was actually in the works.
Thow stole the money to support a lavish lifestyle, which included luxury cars, a yacht, and jet. He “left a trail of financial devastation and heartbreak,” the commission panel said in October.
Earlier this month, the Mutual Fund Dealers Association, a self-regulatory body, fined Berkshire Investment Group C$500,000 for failing to investigate and take reasonable measures after the firm received complaints about Thow in 2004 and 2005.
Berkshire has paid “substantial amounts” to compensate some of the investors who lost money to Thow, the MFDA said.
Thow is also the subject of a criminal investigation by the Royal Canadian Mounted Police.
Reporting by Lynne Olver; Editing by Peter Galloway