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FBI finds Stanford in Virginia, serves complaint

TEXAS billionaire Allen Stanford, accused of an US$8 billion fraud that spooked investors around the world, was found in Virginia yesterday and FBI agents served him with a complaint from US regulators.

FBI spokesman Richard Kolko said the Federal Bureau of Investigation had acted at the request of the US Securities and Exchange Commission (SEC), and that Stanford had not been arrested. A law enforcement official said Stanford was making arrangements to surrender his passport.

The whereabouts of jet-setting, 58-year-old Stanford had been the subject of intense speculation since he failed to respond to a subpoena from the SEC to answer questions about his company's operations.

Stanford has homes in the United States and the Caribbean.

The SEC filed civil charges in Dallas, Texas, on Tuesday against Stanford, two colleagues and three Stanford companies, accusing them of a "massive ongoing fraud".

Earlier this week, US federal agents raided Stanford Group Co offices in Miami, Houston and other US cities.

Five Latin American countries have acted against Stanford businesses, and Britain's Serious Fraud Office (SFO) is monitoring a possible U.K. link after media reports that Stanford's books were audited in Britain. [ID:nLJ625707]

Stanford was found in the area of Fredericksburg, Virginia, about about 50 miles (80 km) south of Washington, D.C.

"We're so pleased and thankful to the lord that he's alive," Stanford's stepmother Billie Stanford told Reuters. She and his father, James, live in Mexia, Texas.

The fallout from the SEC charges against the financier and sports entrepreneur prompted investigations in the United States, Latin America and Europe.

The Wall Street Journal reported on Thursday that US federal prosecutors were investigating whether Stanford was operating a Ponzi scheme. In a Ponzi scheme, money from new investors is used to pay earlier investors.

The SEC has accused Stanford of fraudulently selling US$8 billion in certificates of deposit with impossibly high interest rates from his Antiguan affiliate, Stanford International Bank Ltd (SIB).

The scandal, emerging hard on the heels of allegations that Wall Street veteran Bernard Madoff carried out a US$50 billion fraud spooked international investors and sharply increased public distrust of investment plans.

In Caracas, Venezuela, the government of socialist President Hugo Chavez seized Stanford Bank Venezuela, one of the country's smallest commercial banks, to stem massive online withdrawals. [ID:nN19484206]

"The authorities were forced to take the decision to intervene, and there will be an immediate sale (of the bank)," Finance Minister Ali Rodriguez told reporters.

Another Andean nation, Ecuador, said it was seizing two local Stanford units, a brokerage house and a fiduciary firm.

"We will intervene to protect the interests of investors," Santiago Noboa, the state regulator of the stock exchange in Quito, told Reuters. [ID:nN19508495]

Mexico's banking regulator said it was investigating the local Stanford bank affiliate for possible violation of banking laws. [ID:nN19502667]

Peru's securities regulator suspended the operations of a local Stanford unit. [ID:nN19469236]


ABC News reported on Wednesday that the FBI and others have been investigating whether Stanford was involved in laundering drug money for the Mexico Gulf cartel. The US Drug Enforcement Administration (DEA) said it had no current inquiry underway.

A DEA spokesman said an initial review produced no past investigations, but officials were still checking.

Another federal law enforcement official said US agencies previously had investigated suspected money laundering at Stanford's offshore banks but had not found evidence warranting criminal charges.

As investigations into Stanford's businesses widened, evidence emerged that his privately held Stanford Group Co had been disciplined by the Financial Industry Regulatory Authority (FINRA), the US broker-dealer watchdog.

In 2007 and 2008, FINRA fined Stanford Group for issuing misleading sales literature, not promptly forwarding customer checks from the firm's retail brokerage operations and conducting a securities business without maintaining minimum capital levels.

Mark Tidwell and Charles Rawl, former Stanford brokers in Houston, quit in 2007 over concerns that Stanford was lying to clients about returns.

Rawl told Reuters that when he confronted his managers about possible discrepancies in the performance of funds that he was marketing to clients, he was told of ongoing discussions at the "highest level of management" about whether or not to take a closer look.

At a staff presentation in March 2007, management tried to conceal such discrepancies, Rawl said. "They tried to pull the wool over our eyes in a meeting."


Antigua and Barbuda Finance and Economy Minister Errol Cort said late on Wednesday that the twin-island Caribbean state was scrambling to shore up its banking system against the potentially devastating impact of the fraud charges against its biggest private investor and employer.

In the capital city St. John's, a small Antiguan firm that Stanford identified as the auditors of his offshore bank said on Thursday it had no information about ties to the tycoon.

The head of C.A.S. Hewlett & Co said the firm's former chief executive, Charlesworth Hewlett was the only person with possible knowledge of a relationship with Stanford, and Hewlett died on Jan. 1 at the age of 73.

"We are not privy to any information about any relationship with Stanford," a woman at the firm who would identify herself as Celia told Reuters by telephone.

Britain's Evening Standard newspaper had reported that Hewlett's daughter Celia had taken on the responsibilities of the accounting firm from London after her father died.

Stanford's personal fortune was estimated at US$2.2 billion last year by Forbes Magazine. He holds dual US-Antiguan citizenship, has donated millions of dollars to US politicians, and has secured endorsements from sports stars, including golfer Vijay Singh and soccer player Michael Owen.

The England and Wales Cricket Board (ECB) has severed its association with Stanford, who had sponsored a multimillion-dollar tournament.

The ATP governing body of men's professional tennis circuits said on Thursday it had terminated Stanford's role as its Official Investment Advisor for the ATP World Tour.

Antigua has faced US scrutiny in the past for alleged money laundering activities and operations by suspected Russian "shell" banks.

Jonathan Winer, a Washington lawyer and former State Department official in the Clinton administration, said that following a US warning to Antigua in the late 1990s, consultants and lawyers working for Stanford took control of records of Antigua's bank regulatory agency "to carry out a cleanup" of the suspect banks.

The local bank regulator objected, as did the US government, Winer said. "The conflict of interest that we felt existed with using Mr. Stanford and his people to clean up the banking system was unique ... it was bizarre and inappropriate."

"One of the results of all this was that Antigua was put on a watch list."

In response, Antigua implemented banking reforms requested by the United States, and the sanctions were lifted in 2001.


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