California Pension Fiduciary Gets Jail Term for Ponzi Scheme

Hammond, 63, a registered securities representative and investment adviser, was also ordered to pay $536,521 in restitution. He pleaded guilty on January 3 to embezzling money from employee retirement accounts. Hammond’s prison term will be followed by three years of supervised release, according to a release from the United States Attorney’s office, Eastern District of California.

Court documents detailed that Hammond stole money from his clients’ retirement and investment accounts from December 2010 through February 23, 2011. Some of the money was from employee benefit plans and pension benefit plans.

Hammond advised new and existing clients to invest money in a “private portfolio,” telling them its steady interest rate exceeded what their current investments were earning. The money clients gave him to invest was deposited into a standard business bank account. Hammond then withdrew this money and used it for personal expenses.

Hammond did not provide regular documentation to his defrauded clients, but sometimes gave bogus investment updates, either orally or in falsified account summaries. When one client asked to cash out $58,000, he said that they would have to wait seven days before the money was available. A week later, Hammond returned $48,000, using money stolen from a second client.
 

A few of Hammond’s victims spoke at his sentencing. One described being taken advantage of after she was widowed; because of the amount of money Hammond stole from this victim, she was unable to retire and care for her elderly mother. A second said that she and her husband now faced the prospect of being a financial drain upon their children as they grow older.

U.S. District Judge John A. Mendez called Hammond’s crime “inexcusable” in sentencing, and said the image painted by his supporters was completely at odds with the person who would “take money from widows.”