FBI Tracks Down Billionaire Financier in Virginia

Stanford suspected of Madoff-like fraud

Friday, Feb 20, 2009  |  Updated 6:38 AM EDT
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FBI Tracks Down Billionaire Financier in Virginia

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He owns a home in the Virgin Islands and operates businesses from Houston to Miami and Switzerland to Antigua, where he was knighted in 2006, but Texas financier Allen Stanford chose Virginia to get caught by the feds.

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FREDERICKSBURG, Va. -- An investor supposedly worth billions, but who has been accused of executing a huge fraud scheme, was tracked down Thursday in Virginia.

The FBI, acting at the request of the Securities and Exchange Commission, found Texas financier R. Allen Stanford in Fredericksburg. He was served with court papers related to a civil complaint against his Stanford Financial Group.

The complaint alleges Stanford ran an $8 billion investment scheme similar to the one carried out by Bernard Madoff.

Stanford is not under arrest and is not in custody.

The SEC accused Stanford and three of his companies with committing fraud that lured investors with promises of improbable and unsubstantiated high returns on certificates of deposit and other investments.

Until regulators got help Thursday from the FBI, the SEC had not been able to find Stanford.

A law enforcement official, speaking on condition of anonymity, said the billionaire was served around 1:45 p.m. while sitting in a car with his girlfriend, and authorities do not believe he had been purposely hiding from authorities. The townhouse he was staying in is listed as belonging to the mother of Stanford's girlfriend.

Some neighbors said Monday night that they had no idea that the man who was subject of a nationwide search had been staying in Fredericksburg. Others say they did notice unmarked police cars in the area. One neighbor said it did seem like Stanford's girlfriend had recently come into new money.

"I'd say in the past four months [...] they had new cars coming in," said Fredericksburg resident Deborah Floyd. "My daughter has seen them bring a whole bunch of new stuff in."

Stanford has not been charged with any crime, though federal agents continue to investigate the case.

The fallout from the fraud case is already rattling around the global financial system.

Venezuela on Thursday seized a failed bank controlled by Stanford after a run on deposits there, while clients were prevented from withdrawing their money from Stanford International Bank and its affiliates in a half-dozen other countries.

Stanford's father, James Stanford, told The Associated Press in Mexia, Texas, on Thursday that he hopes the allegations aren't true. "I have no earthly knowledge of it," said the elder Stanford, listed as chairman emeritus and a director for Stanford Financial Group. "I would be totally surprised if there would be truth to it. And disappointed, heartbroken."

Asked what advice he would give his son, Stanford, 81, said: "Do the right thing."

Stanford, 58, is a larger-than-life figure in the Caribbean, using his personal fortune -- estimated at $2.2 billion by Forbes magazine -- to bankroll public works and cricket tournaments.

He also is a major player in U.S. politics, personally donating almost $1 million, mostly to Democrats. At 6-feet-4 and 240 pounds, he towered over House Speaker Nancy Pelosi while giving her a warm hug at the Democratic National Convention last year.

He owns a home in the U.S. Virgin Islands and operates businesses from Houston to Miami and Switzerland to Antigua, where he holds citizenship and the government knighted him in 2006 in recognition of his economic influence and charity work.

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