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Stanford probe widens, Venezuela seizes bank
2009-02-19
CARACAS/ST.JOHN'S (Reuters) - U.S., Latin American and European investigators widened probes on Thursday into the far-flung financial empire of Texas billionaire Allen Stanford, accused of "massive fraud," and Venezuela seized one of his banks. Britain's Serious Fraud Office (SFO) said it was monitoring a possible UK link to the case after media reports that Stanford's books were audited in Britain. Stanford's whereabouts remain unknown. U.S. federal agents raided Stanford Group offices in Miami, Houston and other U.S. cities earlier this week. On Wednesday, ABC News, citing U.S. federal authorities, reported the Federal Bureau of Investigation and others had been investigating whether Stanford was involved in laundering drug money for the Mexico Gulf cartel. Mexico's banking regulator said on Thursday it was investigating the local Stanford bank affiliate for possible violation of banking laws. Peru's securities regulator on Thursday suspended the operations of a local Stanford unit after a similar move on Wednesday by neighboring Ecuador. The fallout from the U.S. Securities and Exchange Commission fraud case against the flamboyant 58-year-old sports entrepreneur has rippled far beyond U.S. borders, prompting investigations from Houston to Antigua and Caracas. The SEC accused Stanford in a civil complaint of fraudulently selling $8 billion in certificates of deposit with impossibly high interest rates from his Antiguan affiliate, Stanford International Bank Ltd (SIB), in a scheme that stretched around the world. Stanford, with homes in the United States and the Caribbean, has remained out of sight since the SEC accused him and two of his top executives of "massive fraud" and misleading investors. The scandal, emerging hard on the heels of the alleged $50 billion fraud by Wall Street veteran Bernard Madoff, has again spooked international investors and sharply increased public distrust of investment schemes. Venezuelan President Hugo Chavez's government moved to take control of the small Stanford Bank Venezuela after it and other Stanford-owned institutions in the oil producer were swamped by panicked investors seeking to withdraw their money. "We have taken the decision to take over," Finance Minister Ali Rodriguez said, adding that the government would seek to quickly sell the bank. REGULATORS MOVE IN Venezuela's move followed similar action by authorities around the region. Regulators in Panama took over a Stanford affiliate there, and a local arm of Stanford Financial Group halted its activities on the stock exchange in Colombia. Clients besieged branches of the Stanford-owned Bank of Antigua on Wednesday in the tiny Caribbean island that was a key outpost of Stanford's business empire. The lines were smaller on Thursday, witnesses said. Antigua and Barbuda Finance and Economy Minister Errol Court said late on Wednesday the twin-island Caribbean state was scrambling to shore up its banking system against the potentially devastating impact of the U.S. fraud charges against its biggest private investor and employer. Antigua and Barbuda's Bankers Association (ABBA) issued a public warning that if customers continued to withdraw funds from Bank of Antigua, "this could destabilize not only Bank of Antigua but the entire financial system." In Venezuela, banking officials were more reassuring, saying the troubles at Stanford Bank Venezuela, one of the country's smallest retail banks, was unlikely to cause much of a disturbance in the sector. The possible UK link to the scandal emerged after the Evening Standard newspaper said the accounting firm C.A.S. Hewlett had audited Stanford's books. Antigua-based C.A.S. Hewlett recently moved its operations to London, according to published reports. "It's a situation where there is the possibility there may be a UK link, and so we are monitoring the situation," a spokesman for the British Serious Fraud Office said. "It's not the case that we have launched investigators at it. We are making contact and liaising with other authorities." The manager of C.A.S. Hewlett's offices in St. John's told Reuters the firm was unaware of any discussions with UK authorities. He said that in 10 years working at the firm he had never met Stanford. DRUGS INVESTIGATION REPORTED In Europe, the fiasco has not yet caused the same shockwaves as the Madoff scandal, though former Swiss President Adolf Ogi on Wednesday stepped down from the advisory board of Stanford Financial Group. Wednesday's ABC report, which cited unnamed officials, said Mexican authorities had detained one of Stanford's private planes as part of a drugs investigation. ABC quoted authorities as saying Stanford could face criminal charges of money laundering and bribery of foreign officials. Authorities said the SEC's action against Stanford on Tuesday may have complicated the federal drug probe. Stanford's whereabouts remain a mystery. CNBC television reported this week that he had tried to hire a private jet to fly from Houston to Antigua, but the jet lessor refused to accept his credit card. The SEC says it does not know where Stanford is and says he failed to respond to subpoenas seeking testimony. A federal judge appointed a receiver on Tuesday "to take possession and control of defendants' assets for the protection of defendants' victims." Stanford's personal fortune was estimated at $2.2 billion last year by Forbes Magazine. He holds dual U.S.-Antiguan citizenship, has donated millions of dollars to U.S. 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 already severed its association with Stanford, and a planned Stanford-sponsored international cricket tournament is now unlikely to take place, ECB chairman Giles Clarke said. In Antigua, Stanford owns the country's largest newspaper, heads a local commercial bank, and is the first American to receive a knighthood from its government. He has homes across the region, from Antigua to St. Croix in the U.S. Virgin Islands to Miami. (Additional reporting by Deisy Buitrago and Jorge Silva in Caracas, Catherine Bosley and Luke Baker in London, Maria Luisa Palomino and Terry Wade in Lima; writing by Pascal Fletcher; editing by John Wallace)
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