Case Study Analysis: Ian Thow's Fraudulent Schemes and Red Flags

The case study analyzes the fraudulent schemes of Ian Thow, who engaged in non-existing investments and used his private holding company to process funds. Red flags at individual, organizational, and behavioral levels are discussed, along with lessons learned from the case.

Case Study analysis

A. Facts of the Case (Summary)
The case illustrates the way in which Ian Thow engaged in 2 schemes for fraud in which non-
existing investments were involved. The first scheme was related to taxes imposed in the
National Commercial Jamaican bank and the Berkshire Investment as well as their shared.
The second scheme had its basis over short term mortgages development.
Ian Thow also made use of his organization as a private holding company in order to process
the funds for investment without his name being referred along with it. The companies such
as Vancouver Island Jet and AYG investments were established as such R v Thow, 2010
BCPC 378 (CanLII). The individuals many times demanded to obtain the relevant documents
but his company did not provide any statements for investment, agreement for mortgage,
certificate on share or prospectus. Thow was, as a result permanently barred from securities
trading and the investment fund promoter job profile was also taken away from his name.
B. Red Flags and symptoms
1. Individual red flags and symptoms
Various red flags from the perspective of Thow (on individual basis) were visible with regard
to his non-compliance such as reinvesting money without taking the clients permission. He
also lived in a lavish manner which was difficult to sustain under his income sources. The
transactions done by him also did not have basic transparency in them Lee v. McGhee, 2018
ONCA 128 (CanLII). There is no doubt that the fraudulent practices were committed by
Thow in Berkshire but still, the company compliance department needs to have the capability
to understand the indications of warning signs. He was following a classic Ponzi scheme and
this was also evident from the way he dealt with his clients. This type of fraud at an
individual level is one in which new investors provide return to the present ones.
2. Organizational red flags and symptoms
As per several economists such as Racicot, the accounts that were upheld started to close and
that too from just one place. This was a major red flag. The researcher also said that such
accounts initiated to close in 2004 and they continued until Thow left in the year 2005. As per
some creditors, Thow also had convinced the clients for transferring the capital through
individual cheques to the privatized organization or towards Thow himself. He did this in
order to invest in various schemes on behalf of them. That capital was either not returned at
all or accounted for in a partial manner. There was a clear suspicion. Charlton defended the

organization because he thought that if someone makes up their mind within the industry to
go to extremes of the business then negotiation with clients was possible R. v. Paterson, 2017
SCC 15 (CanLII). The issue started to come in because the business interests were not taken
into regard and they were concerned only about the profit making ability. This was apparent
to many of the trading outputs but these warning signs were ignored even by the investors
because whenever they asked for the capital amount, they were given cheques to use Kueber
v. Royal Victoria Regional Health Centre, 2018 ONCA 125 (CanLII).
The structure was also outside the normal business structure in which investments were being
made illustrating that the regulatory structure was not normal.
3. Behavioural Science Red Flags and Symptoms
Mr. Thow depicted several red flags through his behavioural signs. He told his complainants
that he was NCBJs director. He purported at selling the company’s shares. He also informed
that these were not listed over the stock market because their sale purchase took place only
within the Berkshire region for the Berkshire clients. He was however, not a director. The
people before investing, should have watched out for his behavioural signs especially when
he did not inform things clearly rather tries to with-held information. Transparency was
missing, which was a clear sign of inadequate behaviour Carleton Condominium Corporation
116 v. Sennek, 2018 ONCA 118 (CanLII). His behaviour towards mostly all the clients was
such that it could raise alarm because missing documents was the key inadequate perspective
apparent.
4. Other Red Flags
There were many red flags such as the money loss in investment and capital inadequacy of
the firm. His way of approach towards the client was also a problem and a red flag.
C. Lessons learned
As per the MFDA guidelines with regard to investigating the supervisory selected, each
individual has the role to perform as much research and investigation as possible to suggest
the chance with regard to law provision contravention or the regulatory mandate
contravention Nufrio v. Allstate Insurance Company of Canada, 2017 ONCA 948 (CanLII).
With regard to the case, it becomes essential for investors to see where they are giving their
money or else facing loss becomes a common regime.

D. Conclusion
When a person or an organization is conducting a fraud in business, it becomes apparent form
their red flags in their business practices and their business structure at individual,
organizational and behavioural level.

References
R v Thow, 2010 BCPC 378 (CanLII)
Carleton Condominium Corporation 116 v. Sennek, 2018 ONCA 118 (CanLII)
R. v. Paterson, 2017 SCC 15 (CanLII)
Lee v. McGhee, 2018 ONCA 128 (CanLII)
Kueber v. Royal Victoria Regional Health Centre, 2018 ONCA 125 (CanLII)
Nufrio v. Allstate Insurance Company of Canada, 2017 ONCA 948 (CanLII)