Mike Hanlen taught auto mechanics in HISD schools for thirty-two years. A conservative investor, Hanlen used a broker who moved to Stanford after shifting from one company to another.
"No sooner that happened and then he left Stanford. And I was tired of following him from location to location and ended up with another broker there."
The new broker worked on Mike and his wife for nearly a year to convince them to invest in certificates of deposit in Antigua-based Stanford International Bank, saying the CDs offered a safe alternative to the stock market, with a higher return than CDs from US banks. Eventually, the Hanlens bought one, but the broker kept up the pressure.
"And he would call us usually once a week, wanting to talk to me about buying more and buying more. And then, when I retired, we rolled everything of my 403(b) into a IRA. And at that time, he had just about every dime we had. We hardly ever heard from him after that until it all collapsed."
The Hanlens lost everything.
By the bank's own rules, the Hanlens should not have been able to buy Stanford CDs. Investors were supposed to have a minimum income of $200,000 or a net worth of at least $1 million. Kevin Sadler of Baker Botts is the lead attorney for Ralph Janvey, the US- appointed receiver for Stanford's businesses. He says those rules were routinely ignored.
"In the Madoff fraud, one of the ways Mr. Madoff sort of created this mystique is unless you had substantial sums of money to invest, he wouldn't even talk to you. With Stanford, however little you had to invest, they were happy to convert that to a CD."
Angela Shaw is the Dallas-based founder of the Stanford Victims Coalition. She says the Hanlens' experience was all too common.
"In so many cases, these people worked for thirty or forty years, and many rolled their entire IRA over into these fictitious CDs."
Shaw says that, in many cases, the shock of losing their life savings broke the health of cheated investors. That's what happened to Jim Bates. The 77-year-old native Houstonian lives on a ranch in Carlton, northwest of Waco, owned by his fiancée, Pattye Ward. In the wake of the Stanford fraud, Jim suffered a stroke. Pattye has put the ranch up for sale.
"Our doctor, all of them, were so worried about Jim, and they said, 'Pattye, it's all this stress.' The SEC should have caught this when they were warned ten years before Jim ever invested."
"The SEC said the SIPC should pay some of this back, and they won't do it. They paid the Madoff people, but they're not paying us. I don't know why."
Tomorrow, a look at investors' uphill fight for restitution in Part II of "Stanford's Victims."