[phpBB Debug] PHP Notice: in file /viewtopic.php on line 1002: date(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone.
[phpBB Debug] PHP Notice: in file /viewtopic.php on line 1002: getdate(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone.
GET YOUR MONEY BACK! Misconduct and malpractice. Investment industry "best and worst practices". Information to improve public protection. Expert witness services for industry and investors. Forensic investment analysis. • View topic - Fraudsters in the US get caught. In Canada they get rich.

Fraudsters in the US get caught. In Canada they get rich.

Index of forum topics, talk to us.

Re: Crook$ in the US get caught. Crook$ in Canada get rich.

Postby admin » Sat Dec 13, 2008 3:49 pm

The problem, as I see it, after nearly thirty years of study is that the financial industry does not wish to move towards "best practices" in financial areas. It is simply too profitable to be able to slide things through the system, where the ultimate effect of any mistake, or any fraud, is that "the customer pays" because they can say "the customer took the risk".

That is simply not true, but they have the advantage within a system like this, and there is no way that they wish to change it so that they do not have the advantage.

Until we tell our governments that we no longer tolerate this kind of self serving system, they will not touch it.

lets hope something changes. make your voice heard. call you provincial MLA, (Greg Weadick and Bridget Pastoor, and tell them on no uncertain terms that you want this provincial securites commission system investigated. Without it you will never be safe investing in Canada.

The short answer.................invest in countries where financial criminals go to jail for fraud. The do not in Canada.

cheers
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Re: Crook$ in the US get caught. Crook$ in Canada get rich.

Postby admin » Sat Dec 13, 2008 3:44 pm

It would be funny, if it were not for the fact that soo many lives have been altered and damaged. I am referring to the travelling circus called the "pan canadian investors group", headed by Purdy Crawford. They should call themselves the "get out of jail pass" group, and the name might more resemble what he has accomplished.

How?

First he convinces some 2000 abused investors that the only way they will get their money back is to sign away their rights to sue. A bit like a blackmail deal, but welcome to the Canadian financial system, that is the way we are allowed to operate up here so live with it.

He gets these poor, unsuspecting folks to give up this right, and then no sooner than that is accomplished, the promise of a return of their money is gone. Poof!

The man is magic in action. Nobody quite like him. thank god.

In a previous deal, he was the chairman of Imasco, which owns Imperial tobacco. Caught in a cigarette smuggling operation worth billions upon billions in tax evasion, he was able to negotiate what some call another "sweetheart deal", for those responsible. And more "do not go to jail passes", for those who he works for.

I am not certain that his track record justifies an Order of Canada. Perhaps a commission of inquiry, but not an order of Canada. I see a man who is slick and able to manipulate the system for the advantage of those who pay him...........not a man who appears interested in serving Canadians. Perhaps there is much about the man that I dont know, but what I do know give me a sick feeling.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Re: Crook$ in the US get caught. Crook$ in Canada get rich.

Postby admin » Sat Nov 29, 2008 3:19 pm

Financial adviser Thow's victims still suffer
Former Thow client feels trapped after losing $600,000 in life savings

Andrew A. Duffy

Tuesday, November 25, 2008

Ron Black is frustrated. To be honest, Black is more than frustrated, but he's a gentleman and frustration is his word of choice.

Black, 82, one of former Berkshire investment adviser Ian Thow's victims who has lost his life savings, feels stuck and his small, one-bedroom James Bay apartment is a constant reminder of what happened to him.

"It just gets bloody frustrating, especially since I would normally be able to go here or there and do things like take trips but I can't do that. I'm stuck," said Black who was forced to sell his house as a result of losing his savings. "And every time I think about it, all I can think about is what he did."

What Thow did was bilk former clients and creditors of more than $32 million before leaving the country in the summer of 2005 to set up home in Seattle . From Black, Thow managed to wriggle $600,000 in much the same manner as he did scores of other clients -- by convincing them to invest in schemes ranging from buying shares in a Jamaican bank to loans for Vancouver developers.

The RCMP has been searching for Thow for nearly five months. He is charged with 25 counts of fraud over $5,000 as a result of his misuse of former clients' investments and faces 10-14 years in prison per charge.

There has been no news from either the RCMP or provincial Crown counsel on Thow's whereabouts, and neither group have offered any kind of update on the progress of their attempts to find him.

And that's starting to eat away at a number of the victims.

"The whole thing pisses me off," said Black, echoing comments from a number of Thow's former clients who in some cases are living on the partial settlements they got from Berkshire -- 29 former clients got a share of $4.1 million from Thow's former employer. "I haven't heard a thing since I spoke with the RCMP in August.

"I mean I doubt I'd get my money back, but if he got thrown in jail I'd at least have that satisfaction."

The recent stock market turmoil has cost Black even more -- having paid his debts, he invested what he had left over in safe and secure products, but even those have been hit hard by the global financial crisis.

"Having lost everything I had and living the way I am, it's just frustrating," he said.

His annoyance will not be assuaged by the silence coming from either the RCMP or Crown counsel.

"There's nothing new I can talk about at this point," said acting sergeant Sammy Wu of the RCMP's Integrated Market Enforcement Team.

The only expansion on that answer he offers is: "That falls under the scope of the investigation so I can't really comment."

It's the answer you get when you ask if they know where Thow is, what they're doing to bring him back to Canada , if they are getting co-operation from foreign police agencies and if they have had any kind of contact with Thow or his legal counsel.

When asked if Crown counsel have been dealing with Thow or his legal team to secure his return to Canada , Crown spokesman Stan Lowe was equally circumspect.

"There are no negotiations to deal with the issue of a plea, we don't negotiate with people regarding plea resolution while there are warrants outstanding for their arrest," he said.

Lowe did say they have been in contact with Thow's victims and empathize with their level of frustration.

"But we're at the point where we have done all we can do," he said, adding they have to wait for the police to bring Thow in.

In recent months it's been rumoured Thow has been seen near his home in Seattle , and that he has contacted some former clients looking for money.

The Times Colonist learned earlier this summer that Thow had been in Jamaica this summer trying to put together a business deal with a hotel owner in that country that was not completed.

If Thow is found on foreign soil, it could take years before he faces a court in Canada as he will likely have to go through what can be a long extradition process.

According to the Canadian Department of Justice, the decision whether or not to make a request for extradition is at the discretion of the prosecutorial authorities, who would conduct the prosecution in Canada . And granting extradition is decided by the determining factors of dual criminality -- whether the alleged offence is a crime in both countries -- and the seriousness of the offence, among other things.

Canada may also make a request to the foreign country for the provisional arrest of the person in question, although it will be Canadian officers bringing that person back to Canada.

aduffy@tc.canwest.com


© Times Colonist (Victoria) 2008
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Sun Oct 19, 2008 12:28 pm

I would like to compare some of the differences between how the USA and Canada handle financial crisis. I hope it will shed some light on how our country became infected with this latest financial pandemic.

In the United States this crisis is being looked at by all levels of government, from the president, to the treasury secretary, SEC, federal reserve. The FBI is looking into 26 firms. Lehman is facing three grand jury criminal probes and at least 12 subpoenas according to the globe and mail saturday oct 18, 2008.

In Canada, we had one person of authority, Susan Wolbergh Jenah of the Investment Industry Regulators (formerly Investment Dealers trade and lobby group) commenting in the Globe headline, "Regulator says brokers failed on ABCP, sets new guidelines".

http://www.theglobeandmail.com/servlet/ ... iness/home

Now that is a great response from an industry self regulator, who is earning close to $750,000, and being paid by the industry to watch the industry. When in her previous position as vice chair of the Ontario Securities Commission, she was only earning close to $400,000, and being paid by the industry to watch the industry. She has come a long way.

Perhaps the distance her career has travelled in the last year allows her to forget that when she was the $400,000 vice chair at the OSC, she signed her name to legal exemptions to our laws which gave these same dealers the right to sell this ABCP paper, without meeting our countries laws. I am certain that if my salary had improved from $400,000 paid by the industry to $750,000 paid by the industry, that I too, would lose track of some o the "little details" that occurred along the way.

(see permissions to break our laws signed by Susan Wolbergh Jenah at: http://www.osc.gov.on.ca/Regulation/Ord ... tdbank.jsp
and
http://www.osc.gov.on.ca/Regulation/Ord ... ntreal.jsp)

My confusion is this. How can this government official, whose agency is funded by the industry, explain the public interest benefits in allowing investment firms to break our laws and knowingly sell tainted or deficient investment products? And then to add insult to our injury and point her finger at investment dealers when she attempts to explain how we got into this mess. I will let you decide whether that is self delusion or worse.

Lets compare another aspect of this crisis. Again the USA has officials, agencies and persons of authority working on the problem. Already the USA has ordered $50 billion of restitution to abused clients.

Here in Canada we have persons like Ms. Wolbergh Jenah aiding and abetting the crisis for $400,000, and then pointing the finger at others for $750,000.

We also have Purdy Crawford coming to the rescue in Canada. He rescued the tobacco industry from criminal charges in the Imperial tobacco smugling scam. He was the chairman of Imasco, owners of Imperial Tobacco when this smuggling took place, and he was the "cleanup man" who wiggled them out of serious charges. You should read how angry the Physicians for a Smoke Free Canada are about the get out of jail passes he negotiated and the sweetheart deal he gained for his boys.

He is now the lead negotiator for the ABCP crisis?? It strikes me as if we have a mafia cleanup man to come and deal with the financial carcass. First item of business was to negotiate a "do not go to jail" pass, by asking investors to agree not to sue. Imagine giving up your constitutional rights to this negotiator as a condition for getting your own money back on these tainted products? It strikes some of the investors as a form of blackmail, but they are powerless to do anything about it. Remember, they have yet to see a dime of their investments for over a year now. Where are our investment and finance officials? Regulators? Again, I refer you to the permissions to skirt our laws that these regulators gave away. Perhaps that is why they cannot investigate and act in these matters. Perhaps it is because of who pays their salary. I wish I knew why Canada has more financial regulatory agencies than nearly any other country, and yet we cannot see them in action.

This is how it gets handled in Canada. By paid industry lackeys, or mafia-like "janitors". People who are apparently not representing the public interest, but a rather narrow interest instead.

In the United States they take this kind of self dealing and misrepresentation very seriously, and people are jailed, fined or both.

In Canada we are still acting in the old British fashion of polite gentlemen who do not offend other polite gentlemen.

It is time we start to realize that too many of those polite gentlemen of industry might be raping our country financially.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Wed Oct 08, 2008 1:55 pm

RBC reaches deal on auction rate securities
TARA PERKINS

Globe and Mail Update

October 8, 2008 at 3:20 PM EDT

Royal Bank of Canada has agreed to buy back roughly $850-million (U.S.) worth of auction rate securities from more than 2,000 investors in a settlement reached Wednesday with the Securities and Exchange Commission.

Under the deal, individual investors, small businesses, small non-profits, charities and religious organizations will have the opportunity to sell back to RBC auction rate securities that they bought before the market for the securities collapsed in February, the SEC said.

The agreement with the regulator also requires the bank to use its best efforts to provide liquidity to larger institutional customers who were sold the securities.

RBC said it has neither admitted or denied any allegations of wrongdoing in reaching the settlement. The bank has also agreed to pay a penalty of $9.8-million to the New York Attorney General's office and state securities commissioners. It estimates the total impact of its settlement will be about $30-million (U.S.) pre-tax in the fourth quarter. The bank will hold the securities that it is forced to buy back, and more than 85 per cent of them are rated triple-A.

The proposed settlement includes charges in U.S. District Court alleging that RBC made misrepresentations to its customers when it told them that the securities were safe and highly liquid alternatives to money market investments.

In fact, the liquidity of the securities was premised on RBC providing support bids for auctions when there was not enough customer demand. RBC continued to market the securities as safe even though it knew about escalating liquidity risks in the weeks and months before the market collapsed, and when it stopped supporting the auctions in February there were widespread auction failures for RBC customers, the SEC said.

The SEC was working in co-operation with the New York Attorney General's Office, the North American Securities Administrators Association, and the Financial Industry Regulatory Authority.

“Our goal when we approached the regulators was to create liquidity for our retail clients who hold auction rate securities, and we are pleased that this has been accomplished,” an RBC spokeswoman said.

The settlement follows similar agreements that the SEC has struck with numerous other banks that were larger players in the $330-billion market for auction rate securities, including Citigroup, UBS Securities, Wachovia, Merrill Lynch and Bank of America.

In a note to clients, BMO Capital Markets analyst Ian de Verteuil said Royal Bank's settlement is towards the lower end of the range of potential costs to settle this issue, and it shouldn't have any impact on the stock price.

Bank of America also struck a settlement with the SEC Wednesday, agreeing to buy back up to $4.7-billion of securities, and to use its best efforts to provide up to $5-billion in liquidity to institutional investors.

By no later than Dec. 15, RBC must offer to buy, at par, all auction rate securities from individual investors, small business investors with accounts up to $10-million, and investors that are non-profit, charitable or religious organizations with accounts up to $25-million, that bought the securities from RBC before the market collapsed on Feb. 11. Until it buys the securities, it must offer individual investors non-recourse loans at no cost to the borrower.

RBC must use its best efforts by the end of 2009 to provide liquidity to its institutional and business auction rate securities investors with accounts of more than $10-million and non-profit, charitable and religious organizations with accounts of more than $25-million.

The SEC said that RBC faces the prospect of a financial penalty after it has completed all of these obligations. Any penalty will take into consideration the extent of the bank's alleged misconduct in marketing and selling the securities, the extent of the bank's co-operation in the investigation, and the costs incurred by the bank to agree with the provisions of this settlement.

The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, but the interest rates on the investments were reset at regular auctions, some as frequently as once a week. A number of companies and retail clients invested in the securities because they could treat their holdings almost like cash.

But the market for them collapsed in February amid the downturn in the broader credit markets.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Tue Sep 02, 2008 8:41 am

Ottawa takes flak over tax scandal
No action taken on stolen account information

John Greenwood, Financial Post

Tuesday, September 02, 2008

The lawyer for the man who touched off an international scandal after he stole information about account holders at a secretive Liechtenstein bank and sold it around the world has criticized Ottawa for failing to take action on information it received about 100 Canadians on the list.

"What I'm appalled about is that nothing has happened in Canada," said Jack Blum, a Washington-based lawyer, speaking in a telephone interview. "There's been no sign of any action or activity [by Canada Revenue Agency] and I don't know why."

Mr. Blum's client, Heinrich Kieber, is reportedly living in a witness-protection program in an unidentified country after receiving death threats.

Earlier this year, Mr. Kieber made headlines after he sold data on more than 1,400 clients of LGT Group, a secretive tax-shelter bank owned by members of the Liechtenstein royal family, to authorities in Germany, the U. K., the United States and several other countries. The Canada Revenue Agency confirmed in February it had received information on about 100 Canadian account holders and was looking into the matter.

But in the six months since then, no action has been taken and the agency has been silent on the matter.

A spokeswoman for the Canada Revenue Agency said on Friday the inquiry is ongoing.

"There is no new information," said Beatrice Fenelon.

The incident touched off a major political row in Germany, sparking the resignation of several high-ranking officials, including the head of the country's post office, who were found to have been sheltering millions of euros in Liechtenstein.

In Italy, the names of Italians on the list were released to the media.

Meanwhile, in the United States the matter was investigated by a subcommittee of the U. S. Senate, which found among other things that wealthy Americans -- several of whom were asked to give testimony -- were using offshore banks such as LGT to avoid paying US$100-billion a year in taxes.

Swiss bank UBS AG was also implicated following testimony it was marketing tax-avoidance services to wealthy clients in the both the United States and Canada.

Rocked by fallout from the case, UBS announced in July that it was halting its offshore banking services for U. S. citizens.

"Tax havens are engaged in economic warfare against the United States, and the honest, hardworking American taxpayer is losing," said Carl Levin, the Michigan senator who spearheaded the investigation.

As a result of the revelations from the Senate probe, the U. S. government is expected to end up with significant tax revenue that it wouldn't otherwise have had.

However, there is little evidence Canadian tax officials are paying attention.

For instance, despite evidence that tax shelter banks are pursuing Canadians as well as Americans, Ottawa has yet to pick up the ball by launching an investigation of its own.

"Why hasn't somebody in Canada held the banks' feet to the fire and said, 'What the hell are you doing here looking for customers?' " said Mr. Blum. "The question is, where is the political will to deal with it. What has your Parliament done? Has anybody raised these issues there?"
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

could also sy that crooks in Canada get an Order of Canada

Postby admin » Sun Aug 10, 2008 5:24 pm

--------------------------------------------------------------------------------

August 7, 2008 at 3:03 PM ET
Refco Executive Gets 10 Years for Fraud
By REUTERS
Tone Grant, former president of Refco, once the largest independent commodities broker, was sentenced to 10 years in prison for his role in a $2.4 billion fraud that involved hiding huge trading losses from clients.

His sentence was handed down by Federal District Judge Naomi Reice Buchwald in Manhattan at a hearing Thursday. No surrender date was set.

Mr. Grant, 64, was the lone top executive at Refco to go to trial. The former chief executive, Phillip R. Bennett, pleaded guilty in February to 20 criminal counts a month before he was due to go to trial.

Mr. Bennett was sentenced last month to 16 years in prison. He is appealing that sentence.

Refco unraveled in 2005, shortly after it became a public company, after revealing that Mr. Bennett had hidden $430 million in bad customer debt. Refco stock plummeted and the company filed for bankruptcy.

Judge Buchwald said Mr. Grant played a pivotal role in the fraud, rejecting arguments that Mr. Bennett was the main culprit. She said Mr. Grant issued “totally false” statements to the public and showed a clear willingness to lie.

Mr. Grant ”made the choice over and over again to join with Bennett — not to extricate himself from the fraud,” the judge said.

Mr. Grant’s lawyers, who are planning to appeal his conviction, had asked the judge to impose a lighter sentence of about 3.5 years. Prosecutors had sought a prison term on par with the 16 years that Mr. Bennett received.

“Mr. Grant continues to maintain his innocence,” Roger Zuckerman, one of his lawyers, said after the sentencing. ”We look forward to the appeal.”

Prosecutors say total losses in the fraud totaled $2.4 billion. After recoveries, the losses still exceed $1.5 billion, the judge said on Thursday.

Mr. Grant was convicted in April by a federal jury of five criminal counts — conspiracy, securities fraud, wire fraud, bank fraud and money laundering.



EXECUTIVES

Name Occupation Birth Death Known for
Purdy Crawford Business 1931 CEO of Imasco Limited, 1985-95
Brian M. Levitt Business c. 1951 CEO of Imasco Limited, 1995-2000

Order of Canada
Purdy Crawford, C.C., Q.C., LL.M., LL.D.
Full Name Honour Received Residence
Purdy Crawford, C.C., Q.C., LL.M., LL.D. C.C. Toronto, Ontario
Honour Appointment Investiture
Companion of the Order of Canada May 3, 2007 April 11, 2008
Purdy Crawford's service to our nation is vast and enduring. A lawyer by profession, he has played a major role in the strengthening and development of capital markets in Canada. While heading several consulting bodies, he has overseen groundbreaking work aimed at improving securities regulations. Known for his integrity, he was also sought out to serve as ethics advisor to the Canada Pension Plan Investment Board. A volunteer who encourages others to give of their time, he is a fundraiser for many non-profit organizations and a leader in the governance of private and public institutions. He is considered a mentor and a model of exemplary citizenship by many.This is a promotion within the Order.

Officer of the Order of Canada May 9, 1996 November 13, 1996
As the quintessential corporate philanthropist, he has generously supported many worthy causes across the country including Mount Allison University, the United Way of Greater Montreal and the Banff Centre for# Fine Arts. During his career as a lawyer and later as the Chief Executive Officer of one of Canada's largest conglomerates, he has emerged as a caring and sensitive leader.



Tobacco companies hit with $1-billion in penalities

(The Canadian Press)

RCMP assistant Commissioner Mike Cabana answers reporters questions
at RCMP headquarters in Ottawa Thursday.
TIMOTHY APPLEBY

From Friday's Globe and Mail

July 31, 2008 at 8:42 PM EDT

TORONTO — Two of Canada's big three tobacco companies will pay more than $1-billion in criminal and civil penalties for orchestrating the wholesale shipment to the United States of cigarettes that were smuggled back to this country and resold at bargain prices.

The admissions of guilt drew only lukewarm praise from anti-smoking activists. Imposed under the federal Excise Act, the fines and settlement costs total $1.15-billion and are the largest ever levied in Canada.

As part of an agreed statement of facts read out in a Toronto courtroom packed with lawyers and investigators, Rothmans Benson Hedges Inc. was fined $100-million.

Simultaneously in Montreal, Imperial Tobacco Canada Ltd. agreed to pay a $200-million fine.

[ Purdy Crawford was the CEO of Imasco during 1985-1995, which covers the 1989-1994 time period when Imperial Tobacco, a wholly owned subsidiary of Imasco, conducted the illegal activity of tobacco smuggling for the purpose of avoiding the payment of Canadian tobacco taxes. ]

Rothmans Inc.


Philip Morris International

In addition, the two companies will pay $815-million in civil damages to the federal government and to the Ontario and Quebec provincial governments.

The companies both admitted “aiding persons to sell and be in possession of tobacco manufactured in Canada that was not packed and was not stamped in conformity with the Excise Act.”

However, tobacco foes voiced dismay that the scheme's architects seemed to have evaded punishment.

“We've been involved in this issue for many years and this exposes once again to the public who we've been dealing with,” said François Damphousse, Quebec director of the Non-Smokers' Rights Association. “But when you look at the executives who were behind this fraud, they're getting off scot free, and I think that's despicable.”

Rob Cunningham of the Canadian Cancer Society said much the same.

“It's extremely significant,” he said of the agreement.

“The tobacco companies today have admitted criminal responsibility and I think they recognize they could never get away with this again. At the same time, the penalties are much less than the billions of dollars the federal and provincial governments lost through contraband and through the 1994 tax rollback on tobacco.”

The charges encompass a five-year period that began in 1989.

Tax-free cigarettes poured south by the truckload, most commonly through the porous St. Regis Mohawk Akwesasne reserve, near Cornwall, Ont., which straddles the U.S.-Canadian border.

From there they were distributed to smugglers who brought them back to Canada to be resold on the street and in convenience stores.

The motive appeared to have been to induce smokers to buy particular brands.

“This was done with the intention of maintaining RBH's share of the Canadian tobacco market,” Crown attorney Graeme Cameron told Judge Robert Bigelow of the Ontario Court.

RBH defence lawyer Glenn Hainey said later he was content with the outcome because it ends an eight-year legal battle and “the uncertainty and burden that would have continued if the matter had not been resolved.”

Until Thursday, Toronto-based RBH was 40 per cent owned by Philip Morris International, the U.S. manufacturer of Marlboro cigarettes. However, word of the agreements triggered an announcement that Philip Morris will take over RBH for $2-billion, or $30 a share.

In large part the twin agreements mirror a deal reached in 2004 between the European Commission and Philip Morris.

European Union regulators had long complained that countries with low tobacco taxes were being flooded with a glut of Philip Morris cigarettes. The aim was to encourage the smuggling of cigarettes to such high-tax nations as Germany and Italy, the EU said.

Philip Morris denied that allegation, but after years of skirmishing agreed to pay the commission more than $1-billion that would be used to combat cigarette smuggling.

The accord included no admission of guilt and Philip Morris called the $1-billion penalty a “voluntary payment.”

Thursday's settlements, however, do acknowledge wrongdoing.

Still unresolved is the future of the third big tobacco firm, Mississauga-based JTI-Macdonald Corp., which is under bankruptcy protection and which, along with two of its executives, is facing trial on fraud charges.

The allegations resemble the ones dealt with on Thursday: That the company dispatched billions of tax-free cigarettes to the United States so they could be smuggled back into Canada through the Akwesasne reserve and resold.

The federal government's first effort to crimp the cross-border trade came in February, 1992, when it briefly imposed an $8-a-carton export tax. However, under pressure from the tobacco industry the measure was repealed four months later.

Two years later, Ottawa took the opposite tack by slashing taxes on domestically sold cigarettes by about $25 a carton in efforts to make their sale more profitable.

The tobacco companies were pleased, but their foes were outraged, estimating that along with promoting cigarette use the tax cuts cost Ottawa more than $10-billion in revenue over the next five years.

Since then federal and provincial tobacco taxes have steadily climbed back up, reviving the contraband among a shrinking population of tobacco-users that now comprises less than 20 per cent of Canadian adults aged 15 or older.

The difference these days is that in Ontario and Quebec at least, the bulk of black-market cigarettes being sold on Canadian streets are manufactured on native reserves, notably Akwesasne and the Six Nations reserve near Brantford, west of Toronto.

National Revenue Minister Gordon O'Connor cheered the “historic” settlement, which he says sends a clear message the tobacco tax laws will be enforced.

However, veteran anti-tobacco campaigner Garfield Mahood was unimpressed, saying he welcomed the fines but that “justice escapes us” because nobody went to jail.

“There's no winners in this because the industry has addicted a whole bunch of young people who then became lifetime annuities for these companies,” he said.

“Over time the companies will financially benefit. And literally thousands of people will die in the future as a result of this crime.”
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Mon Apr 14, 2008 8:45 pm

Reuters
Bayou co-founder sentenced to 20 years in prison
Monday April 14, 5:55 pm ET
By Leslie Gevirtz and Martha Graybow

NEW YORK (Reuters) - A U.S. judge sentenced the "mastermind" behind the collapsed hedge fund Bayou Group to 20 years in prison on Monday, a sentence that reflects the big losses suffered by investors in the $400 million fund.
ADVERTISEMENT

Samuel Israel III, 48, is the last of three officials at the defunct fund to be sentenced for their role in bilking investors in Connecticut-based Bayou out of millions. The fund's demise rocked the $1.8 trillion hedge fund industry and led to calls for more oversight.

U.S. District Judge Colleen McMahon rejected requests for leniency by Israel's lawyer -- who cited the Bayou founder's lengthy list of medical problems, including a bad back, heart problems, and gout. She said he was the "mastermind of this scheme."

"You were, in every meaning of the sense, a career criminal," McMahon told Israel, who leaned on the defense table for support and repeatedly wiped sweat from his bald head and neck.

"You ruined lives," she said, saying investors had lost their retirement funds and money for their children's and grandchildren's education. "They want justice," she said.

"Financial fraud, white-collar crimes are every bit as heinous as every other type of crime and they will be punished severely," McMahon said.

Israel was also ordered to make $300 million in restitution. In addition, the judge ordered him to forfeit his interests in a Bank of America Corp (NYSE:BAC - News) account that held a little more than $100 million. She ordered Israel to surrender no later than June 9 to begin serving his sentence.

Israel pleaded guilty in September 2005 to charges of conspiracy and fraud in connection with stealing from Bayou investors over an eight-year period.

Israel and his co-defendants, former Bayou Chief Financial Officer Daniel Marino and co-founder James Marquez, admitted that they lied to customers about their funds' profits and losses, fabricated audits and financial statements, and created a brokerage that, while executing money-losing trades for clients, generated millions in commission for themselves.

Marino received 20 years in prison. Marquez, who left the fund in 2001, was held less responsible for the long-term fraud and sentenced to four years and three months.

The sentences for Israel and Marino are among the longest ever handed down in a white-collar case. Their punishments were particularly severe because federal sentencing guidelines call for long sentences when there are substantial economic losses to investors in a financial fraud.

Former Adelphia Communications Corp finance chief Timothy Rigas is serving a 20-year prison term; former WorldCom chief executive Bernard Ebbers received a 25-year sentence; and ex-Enron CEO Jeffrey Skilling got 24 years.

Under the guidelines, the judge could have sentenced Israel to up to 30 years in prison.

"When I went into this exercise, I thought you would do all of those 30 years or close to it," she told him. But citing the government's statements that Israel had cooperated, she ordered him to serve 20 years, followed by three years of supervised release.

Ron Geffner, a lawyer for hedge funds and a former enforcement official at the U.S. Securities and Exchange Commission, said Israel's lengthy sentence should serve as a deterrent.

"I don't think the sentence is excessive given the fraud that he's convicted of and that it impacted the financial well-being of potentially hundreds of people," said Geffner, a partner at New York law firm Sadis & Goldberg. "The judge is sending a message at a time our country is struggling economically."

(Additional reporting by Svea Herbst-Bayliss in Boston; Editing by Gerald E. McCormick and Tim Dobbyn)
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Fri Mar 28, 2008 7:53 am




"“I do not believe the current system can remain if the bankers make the profits and the taxpayers share the losses.”"


Even on Wall Street, capitalism takes a hit

BARRIE MCKENNA
Globe and Mail
Friday, March 28, 2008

WASHINGTON — The cover of the latest issue of BusinessWeek shows Ben Bernanke in profile against a bright red and orange backdrop, pensively stroking his grey beard and looking remarkably like Vladimir Ilyich Lenin.

The imagery is intentional and pointed. From BusinessWeek to The Wall Street Journal and beyond, the U.S. business elite has awoken to the realization that the U.S. Federal Reserve Board, backed by the Bush administration, has embarked on a revolutionary course to save financial capitalism from implosion.

It isn't just about the Bear Stearns rescue, which Mr. Bernanke greased with a $30-billion (U.S.) loan. Mr. Bernanke's Fed has opened wide the central bank's vault, pledging nearly half its $900-billion balance sheet to the cause, while strong-arming other federally sponsored lenders to similarly flood mortgage markets with liquidity.

In just a few short weeks, U.S. authorities have given up on the long-held notion that financial markets can self-correct. Government intervention is back in vogue like it hasn't been since the dark days of the 1930s.

“Comrade Ben is determined that there will be no financial meltdown and no depression while he is in command,” economist Ed Yardeni wrote to clients. “Given the initial reaction [on Wall Street], I suppose this means we are all financial socialists now.”

The revolution may be just beginning. From Congress to the U.S. presidential campaign trail, lawmakers are promising a vastly expanded government presence in financial market regulation.

During a major economic speech yesterday in New York, Democratic front-runner Barack Obama called for a sweeping modernization of financial market regulation to address the problems exposed by the housing meltdown.

“To renew our economy and to ensure that we are not doomed to repeat a cycle of bubble and bust … we need to address not only the immediate crisis in the housing market, we also need to create a 21st-century regulatory framework.”

Mr. Obama then outlined several key reform principles, including:

direct Fed oversight of all institutions taking its loans,
minimum liquidity and capital requirements for investment banks,
enhanced rules for “complex financial instruments,”
confronting conflicts of interest at bond rating agencies,
enhancing risk management at banks, and
regulating financial institutions for “what they do, not what they are.”
Earlier this week, Treasury Secretary Henry Paulson, a former Goldman Sachs chief executive, said that if big Wall Street investment banks can run to the Fed for emergency lending, they must also expect tighter regulation. “The world has changed,” he acknowledged.

The Democrats, which polls show are poised to consolidate their hold on Congress in the November election, are already asking pointed questions about the Fed-brokered Bear Stearns fire sale. The Senate banking and finance committees have each demanded more details from Mr. Bernanke and James Dimon, chairman of JPMorgan Chase, which is acquiring Bear Stearns.

Mr. Bernanke is now caught between critics on the political right, who argue he's gone too far in bailing out Wall Street, and those on the left, who say government should be doing much more to help the millions of individuals hurt by the housing crisis.

Peter Wallison, a former U.S. Treasury official who advises the U.S. Securities and Exchange Commission on improved financial reporting, said the hasty Fed bailout of Wall Street is an open invitation to more regulation.

“The Fed's actions have summoned the would-be regulators from the vasty deep, and if they succeed in turning securities firms into wards of the government, as the banks have become, we will have much less innovative, profitable, aggressive, competitive and successful financial system,” Mr. Wallison warned in the latest issue of The American, published by the conservative American Enterprise Institute.

Just how much U.S. taxpayers wind up on the hook for all this is unclear. The Fed could wind up returning profits to the U.S. Treasury, or it could take a major hit.

Investment banks are eagerly embracing the Fed's largesse, according to figures released yesterday. Broker-dealers borrowed $37-billion from the Fed's 2.5-per-cent discount window on Wednesday, $8.2-billion more than the previous week.

Guaranteeing Bear Stearns' portfolio of troubled investments sets a bad precedent by transferring potential losses from the market to taxpayers, complained Allan Meltzer, a professor of political economy at Pittsburgh's Carnegie Mellon University.

“I do not believe the current system can remain if the bankers make the profits and the taxpayers share the losses.”

Others, however, said Mr. Bernanke may have saved the U.S. financial system from the cascading series of failures that marked the Great Depression of the 1930s.

“Bernanke may very well turn out to be a hero here, when everything is said and done and the recovery comes,” Jeremy Siegel, a finance professor at the University of Pennsylvania's Wharton business school in Philadelphia, told the school's online magazine.
[/u][/i]
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Wed Mar 19, 2008 8:19 am

full article posted in the ABCP topic, but here are the quotes that support Canadian financial crooks get rich..............

"it was also disclosed that in connection with the restructuring, the banks, investment dealers and rating agencies such as DBRS that created the ABCP will be granted immunity from prosecution as a reward for supporting the restructuring."

"I went ballistic when I saw the part about the legal release," said a small investor based in Toronto. "I couldn't believe they would let these guys off the hook."

"It's an extreme abuse of investors who were sold a savings product that was flawed," said Diane Urquhart, an independent analyst.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Sun Dec 23, 2007 1:49 pm

I enclose a quote from the book, "LAWYERS GONE BAD". By Philip Slayton.

On page 66 is a comment made by money laundering Toronto lawyer Simon Rosenfeld to an undercover RCMP officer during some "dealings" they had together:

Canada was "la-la land," a dream place for criminal activity, because police has so few resources.


The comment fits very well with the track record of Canadian white collar crime. It is indeed possible to earn hundreds of millions of dollars by misusing and abusing the Canadian public. The examples are endless.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Tue Sep 11, 2007 4:00 pm

Canada lax on fraudsters, Teachers CEO says
LORI MCLEOD

Globe and Mail Update

Tuesday, September 11, 2007 at 12:17 PM EDT

TORONTO — Canada is failing everyday investors through a lack of enforcement against white collar crime, says Claude Lamoureux, chief executive officer of Ontario Teachers Pension Plan.

Speaking at a financial reporting conference Tuesday, Mr. Lamoureux, who will retire from his position at Teachers in December, said the country has a poor track record of bringing corporate fraudsters to justice.

“Legislators are blind to the issue because it is a crime that doesn't leave any blood, just the widows and orphans,” Mr. Lamoureux said in response to a question asked following his speech at a conference hosted by the Canadian Institute of Chartered Accountants.

Since it was launched four years ago, for example, the RCMP's capital markets fraud investigation team has managed just two convictions, both against career fraud artist Michael Mitton.

Meanwhile, the enforcement team's investigations into high-profile cases such as Royal Group Technologies Ltd., Nortel Networks Corp. and Portus Alternative Asset Mangement Inc. have failed to yield any convictions.

This compares with well over 1,000 convictions by the U.S. Fraud Task Force in the past five years, including those of former media baron Conrad Black of obstruction of justice and mail fraud in July.

“Politicians announce these things to great fanfare. The unfortunate thing is that there's no follow up,” Mr. Lamoureux said in an interview after his speech.

Many Canadian politicians are simply “out of their league” when they come up against complicated white-collar crimes, he added.

Teachers sued Nortel over its financial disclosure in U.S. civil court, one of two cases which resulted in a total settlement of $2.45-billion (U.S.) for investors last year. Nortel did not admit any wrongdoing when it made the settlement. It's ironic the Canadian pension plan had to go to the U.S. to get justice for Canadian shareholders, Mr. Lamoureux said.

“We've become essentially a country, a province, of health care and education. Mainly health care, because older people vote. That's the focus and the rest is irrelevant,” he said.

Mr. Lamoureux, who has been in the financial services industry for more than 40 years, will retire from Teachers Dec. 1.

He will continue to work with the Canadian Coalition for Good Governance, an organization he founded with Montreal-based money manager Stephen Jarislowsky in 2002. The group represents Canadian institutional investors, and pushes for positive change at public companies.

“What we now want to create is an advisory group of former CEOs and people who have been on boards and who have a lot of experience, and can help the coalition,” Mr. Lamoureux said. The coalition is also working with institutional investors around the world regarding improving global governance practices.

After taking a break from December to March, Mr. Lamoureux said he will resume his efforts to improve corporate governance in Canada. He has been “talking to lots of people,” about future projects, and his endeavours could include joining the boards of directors of some Canadian companies.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Mon Sep 10, 2007 9:54 pm

further indicators of regulatory failure in Canada

as follows:


"The Ian Thow Affair"
@ http://www.investorvoice.ca/Scandals/Th ... _Index.htm



A cautionary note on advisors
SEC Raps Firms For Failure To Sound Alarm On Dealings

Barry Critchley
Financial Post



Monday, September 10, 2007
Here's something that Canadian regulators -- including those who signed off on Manulife's purchase of Berkshire Investment Group -- may like to reflect on. It was posted last Thursday on the SEC's Web site.

"The SEC today instituted settled enforcement actions against Commonwealth Equity Services; Detwiler, Mitchell, Fenton & Graves, and James McCarty, for failing to reasonably supervise former registered representative Bradford J. Bleidt, who engaged in a multi-million dollar fraud while they were overseeing him. At least forty of Bleidt's victims were over age 70 at the time the Commission charged him."

"The protection of investors, including senior citizens, must be of foremost importance to broker-dealers and their personnel," said Linda Chatman Thomsen, director of the SEC's enforcement division. "Firms who fail to have or to enforce reasonable policies will be held accountable for their inaction."

David Bergers, director of the SEC's Boston regional office, added, "Investors should be able to feel safe knowing that broker-dealers and their representatives are designing and enforcing procedures to prevent and detect fraud."

Bleidt was associated with Commonwealth from 1991 to 2001 and with Detwiler from 2001 to 2004. In 2004, he was charged with securities fraud stemming from a scheme in which he misappropriated more than US$31-million from more than 100 victims. Bleidt is serving an 11-year jail term as a result of related criminal charges brought by the United States Attorney's Office in Boston.

The SEC's order against Commonwealth finds that it failed to establish reasonable policies and procedures for responding to red flags related to Bleidt's outside business activities. In particular, the order finds that Commonwealth's staff received, but did not review, financial statements for one of Bleidt's investment advisory businesses and thereby ignored a red flag that this business was failing and he was providing significant cash infusions to keep it afloat. In addition, no one at Commonwealth followed up when Bleidt failed to disclose the source of capital for a radio station that he partially owned.

The SEC's order against Detwiler finds that it failed to adequately monitor the outside business activities of Bleidt. For example, Detwiler personnel did not reasonably investigate how Bleidt was funding his outside business activities, including his two investment advisory businesses and the radio station. In fact, these outside business activities were being funded by Bleidt with the victims' misappropriated funds. These orders also find that Commonwealth failed to have reasonable procedures for the review of incoming mail and that Detwiler failed to reasonably implement the procedures it did have.

The SEC's order against Mc-Carty -- his supervisor -- finds that he did not follow Detwiler's procedures for the opening and review of incoming mail. The order further finds that Mc-Carty was not conducting the formal annual audits of each registered representative required by Commonwealth's and Detwiler's procedures and that he accepted Bleidt's explanation that the source of his money was a "trust fund" without any evidence of the existence of the trust fund and the supposed dollar amounts it contained.

The SEC imposed US$250,000 penalties against each of Commonwealth and Detwiler and a US$50,000 penalty against Mc-Carty.

Previously, Commonwealth, Detwiler and a third firm paid a combined total of more than US$6-million to victims of Bleidt's fraud. Earlier this year, judgments of more than US$31-million were entered against Bleidt and his investment advisory firm in the SEC's case against them.

---

That case brings us to the situation at Berkshire, a firm that employed Ian Thow, a senior vice-president in its Victoria office. Thow, who skipped out of the country more than two years back, has been the subject of a hearing before the B.C. Securities Commission that alleges fraud and misrepresentation and an investigation by the RCMP, which is ongoing. Berkshire is also being investigated by the Mutual Funds Dealers Association. Thow is alleged to have misappropriated more than $30-million of clients' money, a fair chunk of which had been invested in shares of the National Commercial Bank of Jamaica. AIC, the parent of Berkshire, bought the bank in 2002.

Berkshire said Thow was not authorized to buy shares in the bank. That approach ignored the reality: Thow allegedly told his clients they were buying shares in the bank -- a bank that was in effect part of the AIC family. Berkshire's mantra became, Thow was involved with outside business and his former clients should have known that. The MFDA seems impressed with that argument given the distinction it seems to be placing on member business and non-member business. We await the results of the Canadian investigations.

bcritchley@nationalpost.com

© National Post 2007




Hiding in plain sight
LYLE JENISH

Friday, August 31, 2007 at 3:18 AM EDT


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.



Ian Thow outside his Seattle condo, July 27, 2007 (Amanda Koster)


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.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Thu Aug 30, 2007 9:14 am

source Vancouver Sun

Slim chance of a national securities regulator

By David Baines
Vancouver Sun


Wednesday, August 29, 2007


Federal Finance Minister Jim Flaherty was in town Wednesday, extolling the virtues of a single national securities commission. At the request of my editor, I met with him, somewhat reluctantly, I must say, for although I believe in a national commission, it just ain't going to happen.

For years, I have been listening to finance ministers and blue-ribbon committee members promote the idea of a national commission, with no tangible result. Now it's Flaherty's turn, and he's playing the enforcement card, which is hot these days.

After the acquittal of former Bre-X Minerals geologist John Felderhof in Ontario, and the successful prosecution of Canadian businessman Conrad Black in Chicago, Flaherty called Canada's record of securities enforcement an international embarrassment.

"We need to better protect investors against breaches of securities law, and we need to do that in our own country and not rely on other countries to do it for us," he told Canadian Press, arguing for a national commission.

He reiterated that sentiment during our meeting Wednesday. But really, I don't think a national regulator would have had any more success in the Felderhof case. This was not an administrative proceeding. It was prosecuted in a Canadian court, where the deck is enormously stacked in favour of defendants.

Black was also prosecuted in court, but the difference is that it was an American court. As everybody should know, U.S. courts know how to deal with white-collar crime. Canadian courts do not. A national securities commission is not going to change that.

Similarly, a national regulator in Canada is not going to jolt the RCMP Integrated Market Enforcement Teams out of their slumber, which has been going on for nearly four years now. Nor will a national regulator be able to get Crown prosecutors to appreciate the nuances of securities fraud, or the judiciary (as already noted) to hand out meaningful sentences. And it won't do anything to mitigate the unreasonable impediments to effective prosecution and adjudication that are imbedded in our constitution.

Flaherty notes that the federal government has committed more money to the RCMP, which is unfortunate in my view. It is good money after bad. He also talks about specialized prosecutors and even judges who are schooled in securities matters, but I have heard this sort of talk before with no discernible result.

Still, as Flaherty argues, national regulation makes a lot of sense. Or to put it another way, provincial regulation makes no sense. At one time, maybe it did, when provinces wanted to preserve and pursue their own form of securities administration. But now they are all moving toward a uniform rule system, called the passport system, where a ruling in one province is considered a ruling in all. The only exception is Ontario, which wants to leap immediately to a national system.

This process of rule harmonization is painfully slow and expensive, and represents a huge diversion of resources and manpower that could otherwise be directed to the more useful business of enforcement. Issuers and dealers, meanwhile, are being forced to run a gauntlet of provincial regulators every time they sneeze. This is also a big waste of time and money.

There may also be some benefits when it comes to administrative enforcement actions (cases that go to commission hearings, rather than court). A market suspension in B.C. would, for example, become automatically effective in Ontario.

There is also something to be said for structural renewal. A new national commission and new personnel might revitalize administrative enforcement efforts, speed up the pace of regulatory actions, and squeeze out some of absurdly liberal sanctions that have so badly marred the hearing process in B.C.

When you really think about it, it's hard to come up with a single good reason for our present system of 13 different jurisdictions. You would think that our provincial governments would jump at the idea of a national commission. But no, only Ontario has publicly endorsed the idea. At a meeting of provincial finance ministers in June, most turned it down.

"Publicly, they did," Flaherty says. "Privately, not."

In other words, politics is getting in the way of good sense. Politicians do not want to be seen to be giving up what is constitutionally and historically a provincial jurisdiction. But I think there is a stronger force at work - commission self-interest.

Provincial regulators are like corporate managers. They are theoretically responsible to higher powers, but they actually control the agenda. And there is no way they want to upset their cushy fiefdoms, where the top guys make anywhere from $500,000 to $1 million each, and walk around town like mini-gods.

So we have an endless merry-go-round, with finance ministers and special committees (Flaherty is forming yet another committee to advance the issue) pushing for national regulation, and provinces (B.C., Alberta and Quebec, in particular) digging in their heels.

So how is he going to break the logjam? Flaherty says that, if he wants, he can assert authority on the basis that trade and commerce is a federal responsibility. I suggest this is a court case he would lose.

"I wouldn't assume that," he replies. Then, softening his tone, he adds, "But we're not going there."

He says the federal government has made national regulation a priority and has made that priority clear to the provinces. "We are a focussed government. We don't take on causes lightly," he says in a very deliberate tone.

He says the provinces have to understand that, if they want the federal government to enhance trade arrangements, such as the softwood lumber deal in B.C., then the provinces have to play ball on other matters that are clearly in the national interest.

Hmm. This still sounds like moral suasion to me. Not enough to pry our provincial politicians out of their parochial ruts and break the spell that the securities bureaucrats have cast over them. My bet is that Flaherty and succeeding finance ministers will be riding this merry-go-round for years to come.

dbaines@png.canwest.com

© Vancouver Sun
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Postby admin » Fri Aug 17, 2007 9:22 pm

Here is why:

1. Canada lacks an Investor Protection Agency.

2. The industry is thus allowed to police itself, (the honor system) which fails for these reasons;
(a) Some of the Securities Commissions in thirteen provinces and territories in Canada are actually funded and paid for by the investment industry.
(b) The Securities Commissions, although charged with and required to enforce the law in each province, delegate those responsibilities (or abrogate) to self regulatory agencies posing as lobby groups. (or is it lobby groups posing as self regulators? In either case the financial cops are delegating to hired rent-a-cops who happen to moonlight as industry reps.)
(c) Allowing the smartest, richest, and best connected businessmen and lawyers to police themselves while acting as custodians of "rivers of money" is and old movie to which we all know the ending. Why is it still playing in Canada?

3. The result of this faked regulatory game is that real police forces leave financial crime pretty much alone, and real judges admit that they pretty much defer to these agencies.

4. The next result is that there is effectively no enforcement in Canada of the sneaky, systemic, hidden, "tricks of the trade" kinds of financial abuse of Canadians. ( refer to Canadian Business mag editorial, page 80, aug 13/27 2007 for conviction numbers, or count the number of ears you have if you cannot find the mag)

5. No enforcement means there is no crime, means there is no problem, therefore all is good. Canadians are not being abused by financial professionals to the tune of $30 to $60 bil per year.

6. Nortel, Bre-X, Hollinger, Portus, Crocus, Eatons, half the income trusts issued, all the double commission dipping, advisor fees on top of commissions, vice versa, highest fee fund promotion, house brand product switching,..........all of it never happened. In Canada.
admin
Site Admin
 
Posts: 2823
Joined: Fri May 06, 2005 9:05 am
Location: alberta

PreviousNext

Return to Click here to view forums

Who is online

Users browsing this forum: No registered users and 1 guest

cron