Retiree says he lost life savings with Stanford
Saturday, January 28, 2012
HOUSTON (AP) — A retired architect and military veteran told jurors at Texas financier R. Allen Stanford’s fraud trial Friday that he lost nearly all of his life savings investing with Stanford, and has survived by eating “a lot of macaroni and cheese” and selling his possessions on eBay.
Joseph Flynn, 69, also said he has had to forgo some medical treatment for a heart condition because he can’t afford it. Flynn testified that starting in August 2006, he sunk most of his life savings — more than $1.6 million — into certificates of deposit, or CDs, that he purchased from the Caribbean bank owned by Stanford. Federal prosecutors allege the CDs were part of a massive Ponzi scheme that bilked investors out of more than $7 billion over more than two decades.
Flynn, who served in the Marines during the Vietnam War, told jurors he was not allowed to redeem his CDs just before Stanford’s bank and other businesses were taken over by authorities in 2009.
“How has the loss affected you?” prosecutor Andrew Warren asked Flynn.
“It’s been a pretty severe loss. Eating a lot of macaroni and cheese. I’ve been pretty good at selling our assets on eBay” including a car and watches, he said. “We’ve had to cut back and restrict everything we have done. Currently our expenses are $2,500 more than income we receive from Social Security and disability.”
Flynn, who had open heart surgery in 2009, said his doctors last year wanted to treat him with a new drug. But he said he can’t afford the $2,500 it would cost each month because it is not covered by Medicare.
Stanford’s attorneys contend the financier was a savvy businessman whose financial empire was legitimate and who never failed to pay what was owed to investors.
Stanford is on trial for 14 counts, including mail and wire fraud, and faces up to 20 years in prison if convicted. He was once considered one of the United States’ wealthiest people, with an estimated net worth of more than $2 billion.
Authorities say Stanford, 61, sank investors’ money in a variety of his own businesses and that he used up to $2 billion of investors’ money as personal loans to buy homes and yachts and fund cricket matches. The financier’s businesses were headquartered in Houston.
Flynn, who lives in a suburb of Orlando, Fla., said after retiring he met with a financial advisor from Stanford’s companies, who had also managed his company’s 401(k) plan. The advisor suggested Flynn invest his retirement in the bank’s CDs.
Flynn said he was told “it was a very secure investment” and that the CDs he bought would be insured by Lloyd’s of London, the world’s fifth-largest insurer.
“We were told if we needed the money anytime we wanted, we could have it back” in case it was needed to pay for health care costs, Flynn said.
Kenneth McGuire, one of Stanford’s attorneys, asked Flynn if anyone forced him to buy the CDs. Flynn said he was not forced but persuaded.
Flynn also told McGuire he couldn’t remember if he had read sections of a disclosure statement he had signed when he bought the CDs that indicated the CDs were not insured and investors could lose their money.
Stanford’s attorneys have suggested that the ex-chief financial officer for the financier’s company, James Davis, is the real culprit behind the financial fraud alleged by prosecutors. Davis has pleaded guilty and is expected to testify next week on behalf of prosecutors.
Stanford has been in jail since his arrest 2 1/2 years ago. His trial was delayed after he was declared incompetent due to an addiction he developed in jail to an anti-anxiety drug and he underwent treatment. He was declared fit for trial last month by U.S. District Judge David Hittner.
During a break in Flynn’s testimony, Hittner told attorneys he had noticed that Stanford had been holding his head and that if he needed to lie down, he could listen to testimony from a back office. Stanford declined and remained in court.
The trial was to resume Monday with testimony from a former Stanford employee, who began testifying late Friday.