Stanford tracked down by FBI

Billionaire found in Virginia as authorities launch criminal investigation into money laundering claims

Allen Stanford, the billionaire who bankrolled English cricket, was tracked down in Virginia by FBI agents, two days after being accused of an $8bn (£5.6bn) fraud.

The Texan financier's whereabouts had been unknown since regulators accused him of lying to clients in the US, the Caribbean and across Latin America, and shut down large parts of his $50bn empire. Stanford was not arrested yesterday, since the charges against him stem only from a civil lawsuit brought by America's financial watchdog, the Securities and Exchange Commission. FBI agents served the SEC's lawsuit on Stanford after finding him in Fredericksburg, Virginia, where he has relatives. There was no sign that he had been trying to evade authorities, an FBI official said. He was served with the papers in his car, where he was travelling with a girlfriend. He was "making arrangements to turn in" his passport, the official added.

Yesterday, however, it emerged that the FBI is also examining criminal charges against Stanford, including allegations that his Antigua-based bank was used as a money-laundering centre by drug cartels. The enquiry calls into question the ultimate provenance of the $20m in banknotes that Stanford trailed in a transparent chest through Lord's cricket ground last summer, when he announced his controversial entry into English sport.

The "Stanford Series" Twenty20 cricket tournament – with its $20m prize – that took place in Antigua last October looks certain to be the last, and the fallout has left the bosses of the England and Wales Cricket Board fighting for their future.

Stanford had not been seen in public since the SEC's charges were laid, and his father said he was concerned for his son's safety. It was reported on Wednesday that a Stanford employee had tried to charter a private jet for a one-way trip from Houston to Antigua, but the billionaire's credit card was declined.

In Britain, the Serious Fraud Office said it was monitoring the situation after revelations that Stanford had been using a London-based auditor to oversee a business that, it is now believed, reported fake investment results for up to 15 years.

But it is in the US where the authorities are most actively crawling over Stanford's business empire – a network of banks and brokerages he claimed looked after $50bn on behalf of its clients – and where the FBI has become involved in the investigation.

Stanford International Bank (SIB), headquartered in the offshore financial centre of Antigua in the Caribbean, had been investigated before over allegations of money-laundering, and lurid reports have continued to swirl in the island, in Miami, where Stanford had an office, and in Houston, where the company was based. The FBI is expected to comb through Stanford's accounts to try to examine the provenance of billions of dollars funnelled into Antigua from countries including Mexico, Colombia and Venezuela.

ABC News reported that a Stanford corporate jet had been detained by the FBI as part of a long-running money-laundering inquiry, and was found to contain cheques linked to the violent Mexican drug gang known as the Gulf cartel. Sources in Houston refused to confirm the story, which had been circulating for several months.

In 1998, with the US authorities putting pressure on Antigua to loosen its banking secrecy laws, Stanford handed over $3.1m from the Mexican drug dealer Amado Carrillo Fuentes who had flooded the US with cocaine before his death the previous year. The funds were brought to Stanford's bank by two frontmen, through its Houston-based financial consultants. This was "the first and only time we have ever had an active account where this has happened," Stanford said at the time, and handing the money to the US authorities "was the right thing to do morally, and the legal thing to do".

In Mexico City yesterday, the financial regulator, CNBV, is looking into whether Stanford Fondos, the Mexican operation, broke laws on investing abroad. Financial laws forbid Mexican banks to encourage clients to invest in unauthorised certificates of deposits abroad, yet some 20 per cent of the Stanford funds in Antigua are believed to have come from the country.

Last week, as rumours of an investigation by the Securities and Exchange Commission began to circulate, Stanford promised to "fight with every breath to continue to uphold our good name and continue the legacy we have built together". The business had been created by his grandfather in the teeth of the Great Depression, and his father, James Stanford, is still listed as "chairman emeritus".

Interviewed by the Houston Chronicle, Mr Stanford Snr said he had not heard from his son since he spoke to him last week and told him he had run into difficulties. "He just told me to watch the papers, the Wall Street Journal and all that. He said something, stuff that had been rumoured, but nothing like this," he said. "I cannot imagine, I cannot believe – I will not believe what is being alleged actually happened. I'm worried for his safety. You know, he's my son."

Antiguan authorities again called for calm yesterday, after hundreds had thronged Bank of Antigua trying to get deposits out. Although it is owned by Stanford, the bank is separate from SIB and not under threat, they said.

Venezuela seized a local bank owned by Stanford to stem massive online withdrawals, saying it would quickly sell the bank – Stanford Bank Venezuela, one of the country's smallest commercial banks – and that it had already been approached by potential buyers. Authorities in five Latin American countries have now taken action against Stanford businesses, with Ecuador seizing two units of the group.

SIB employed an army of salesmen to tout its miracle-grow investment products in the US and Latin America, competing against each other for fat commissions and outsize bonuses. Few noted the extraordinary nature of the returns that Stanford was promising: double-digit percentages every year on a set of investments that could not have returned as much.

Two brokers, however, smelt rats and are being hailed as whistleblowers in the case, after helping the SEC and the FBI with their investigations. Charlie Rawl and Mark Tidwell fought a three-year battle with staff at Stanford HQ to get answers to a growing number of questions about the company's purported returns – and they resigned in December 2007 convinced their employer had been lying to clients. In a lawsuit alleging constructive dismissal, they claimed Stanford had been faking investment returns.

"We were happy when we first got there but, over time, the discontent grew as we learnt something one year, another thing the next, two things, then three things," said Mr Rawl.

'Sir' Allen Stanford Is he really a knight?

Three years ago, Allen Stanford's website announced he had been made Knight Commander of the Most Distinguished Order of the Nation after becoming a citizen of the Commonwealth territory of Antigua, explaining: "He was presented [with] this honour by His Royal Highness Prince Edward, Earl of Wessex." But in November last year, it was reported that Prince Edward had merely been present at the ceremony, and that the honour had actually been bestowed by the Governor-General of Antigua and Barbuda. The website was subsequently altered. Candidates for honours in Antigua are usually selected by a committee, but Stanford's knighthood prompted anger around the island after it emerged that he had been nominated by only a few powerful politicians who were using new laws to bypass the normal vetting process.

Suggested Topics
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
These photographs released by the University of Maryland Medical Center show images of full face transplant recipient 37-year-old Richard Lee Norris of Hillsville, Virginia
mediaGQ front page features man who underwent full face transplant
Lionel Messi looks on at the end of the final
Arts and Entertainment
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
Life and Style
Attractive women on the Internet: not a myth
techOkCupid boasts about Facebook-style experiments on users
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
The Swiss Re tower or 'Gherkin' was at one time the UK’s most expensive office when German bank IVG and private equity firm Evans Randall bought it
Moeen Ali wearing the 'Save Gaza' and 'Free Palestine' wristbands on his left arm
Arts and Entertainment
The Great British Bake Off 2014 contestants
Life and Style
Arts and Entertainment
filmThe Battle of the Five Armies trailer released
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Java Developer

£45000 - £60000 per annum + competitive: Progressive Recruitment: JAVA DEVELO...

HR Business Partner (Maternity Cover 12 Months)

£30000 - £34000 Per Annum 25 days holiday, Private healthcare: Clearwater Peop...

Microsoft Dynamics AX Developer

£475 - £550 per day: Progressive Recruitment: MDAX / Dynamics AX / Microsoft D...

.Net/ C# Developer/ Analyst Programmer - Eciting new Role

£45000 - £50000 per annum + competitive: Progressive Recruitment: .NET/ C# .Pr...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on