Broker on trial in loss of $400,000 savings client wanted to invest for disabled daughter

THE BALTIMORE SUN

William Wood entrusted his life savings of more than $400,000 to a Bethesda stockbroker in the late 1980s, convinced that he was securing the financial future of his only heir, a disabled daughter.

But prosecutors contend that, after Mr. Wood developed Alzheimer's disease, the broker, Charles Zandford, bled the account of every cent. He spent much of the money on Jaguar restorations, fancy trips, his hobby of flying planes, and to fatten his and his girlfriend's personal accounts, according to court records.

"No one complained, no one took notice -- there was no one there to cry foul," said Assistant U.S. Attorney Thomas M. DiBiagio as the trial opened yesterday in U.S. District Court in Baltimore. "Mr. Wood had brain damage, was blind, and suffered from dementia and a stroke."

Mr. Wood died in 1991 at 75. The activities Mr. Zandford is accused of might have gone undetected except that two other (( brokers at the Dominick and Dominick firm were being investigated on suspicion of defrauding clients.

In reviewing Dominick accounts, investigators from the National Association of Securities Dealers came across some suspicious transactions by Mr. Zandford, and began looking at him too.

Between November 1987 and March 1988, they learned, he had been given $419,255 to invest "conservatively," according to Mr. Wood's instructions. Mr. Wood had been unemployed and on disability for nearly 20 years; the money had been part of a family inheritance, investigators later were told. By Sept. 28, 1990, the Wood account had a zero balance.

Defense lawyer Frederick Greco yesterday told jurors that Mr. Zandford handled the money according to Mr. Wood's instructions, and he would show agreements signed by both men to prove it.

"This is not a simple case of a greedy person running away with someone's money," Mr. Greco said.

Mr. Zandford befriended Mr. Wood and often brought him meals. When medical decisions had to be made for the elderly man, Mr. Zandford pulled together estranged relatives to determine what was best.

"He felt he had become part of Mr. Wood's family," Mr. Greco said. The money that wound up in Mr. Zandford's accounts was from loans or business investments agreed to by Mr. Wood, who he said also agreed to pay Mr. Zandford $100,000 to handle other personal business for him.

Testimony from doctors will dispute that Mr. Wood had Alzheimer's disease, Mr. Greco said.

"He was looking for someone younger to help him and support him," Mr. Greco said.

Brokers are prohibited, however, from accepting loans from clients or becoming their "personal representative," under rules of the Securities and Exchange Commission. They also are not permitted to engage in outside business activities.

Mr. Zandford is being tried on 13 counts of wire fraud and could be sentenced to five years in prison on each count, if convicted.

No money is left to be recovered for Mr. Wood's daughter, who suffers from multiple personality disorder and has emotional disabilities. Mr. Zandford filed for bankruptcy in 1992, claiming no assets.

Mr. Zandford, 43, of Rockville joined Dominick and Dominick in May 1987 after working as a broker for Prudential-Bache and Merrill Lynch. He had troubles at both firms and was fired from Prudential-Bache after depositing personal funds in a client's account, his lawyer said.

Prosecutors say that as Mr. Wood's health problems grew and he was placed in a nursing home, Mr. Zandford began tapping the Wood accounts for his own use.

Between May and June 1988, he wrote three checks against the account and deposited the money -- $41,000 -- in his personal bank account at Farmers National Bank in Annapolis.

In July, he sold securities valued at $145,000 and the next week deposited the money in a different account he had opened at the same bank. The transfers continued.

"The account was used like a money machine -- withdraw, withdraw, withdraw," Mr. DiBiagio told jurors. Some of the it was used to pay off $100,000 in personal loans, including $39,000 for a pleasure boat. Another $67,000 was spent to purchase and restore two Jaguars and a BMW.

In some cases, the transfers were recorded by Mr. Zandford as loans from Mr. Wood.

Mr. Zandford resigned from Dominick and Dominick within two hours of being confronted by investigators. The firm has since closed its Bethesda office, and company officials at the New York headquarters did not return phone calls yesterday.

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