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

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