Feb. 10 (Bloomberg) -- A retired U.S. Air Force medic told jurors at R. Allen Stanford’s criminal trial that she lost four-fifths of her savings and her dream of a comfortable retirement on now-worthless certificates of deposit from Stanford’s bank.
“Being in the military, I was just a middle-class, hard-working person who took care of my family and made my ends meet,” a tearful Dianne Hammer testified today in Stanford’s fraud trial in federal court in Houston. “You really don’t get rich serving in the military.”
Hammer’s broker at Stanford Group Co. and marketing brochures from Stanford International Bank didn’t say that investors were supposed to have a net worth of $1 million or annual incomes of $250,000 to buy CDs from the Antiguan bank, she said. Prosecutors claim Stanford ran the bank as a Ponzi scheme that defrauded investors of more than $7 billion.
Testifying for prosecutors, Hammer, 54, said she increased her Stanford CD holdings from $50,000 to $260,000 in August 2008, after she discussed deteriorating financial market conditions with her Stanford broker.
“He said since it was an overseas bank, it was safer than banks in the U.S. were at the time,” she said. The adviser also recommended she combine investments with her elderly parents so the family could qualify for a higher interest rate on their joint holdings at SIB, she said.
Stanford, 61, has denied wrongdoing. His lawyers have told jurors that all of Stanford’s customers were wealthy, accredited investors, with sophisticated investment knowledge.
Hammer told jurors that she now lives on a modest military pension. When U.S. securities regulators seized Stanford’s operations on suspicion of fraud in February 2009, Hammer said her SIB statement listed her CD account balance as $280,679.
Her parents’ statement that month indicated a CD balance of $295,604, which she said represented roughly 90 percent of their savings. Her mother has since died of cancer, and her father was diagnosed with Alzheimer’s disease and lives in an assisted-living facility.
Assistant U.S. Attorney Gregg Costa asked Hammer if she or her parents have gotten any of that money back. She said they haven’t.
“You’ve got to have money to be able to retire,” Hammer testified. “I wanted to be able to travel, buy a house, and help my children as I could, too.”
Costa showed Hammer a photo of a yacht that Stanford spent $13 million renovating and a snapshot of the former financier standing beside a glass case filled with $20 million, the prize money awarded to winners of a cricket tournament Stanford sponsored.
“If you’d known that millions of dollars in CD money was going to rebuild yachts and to cricket prizes like in that glass case, would you have bought the CDs?‘‘ Costa asked. ‘‘Do you wish you had some of the money in this yacht or in this glass case?’’
The judge barred Hammer from answering when Stanford’s lawyer, John Parras, objected to the questions as inappropriate for a jury weighing guilt or innocence.
Stanford’s trial, which may last six weeks, is completing its third week of testimony.
The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is SEC v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).
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