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FBI serves civil papers on Stanford

February 20, 2009|Carol J. Williams

FBI agents tracked down billionaire R. Allen Stanford at the Virginia home of an acquaintance Thursday and served him with legal papers in a civil case accusing him of orchestrating an $8-billion investment scam.

But there have been no criminal charges filed against Stanford so he remains free, FBI spokesman Richard Kolko said. Neither was Stanford asked to remain in the area or in touch with federal agents, Kolko said.

"He was served the papers and went on his way," Kolko said. "He wasn't hiding."

Stanford was located in Fredericksburg, Va., sitting in a car outside the home of an acquaintance, Kolko said.

The Securities and Exchange Commission filed a civil complaint Tuesday alleging that Stanford and two other top executives of his investment empire misled depositors in a "massive fraud."

A federal judge in Texas issued search warrants and shut down the Houston headquarters of Stanford's global financial empire. The SEC has said it continues to investigate Stanford and two others, Stanford International Bank Chief Financial Officer James Davis and Stanford Financial Group Chief Investment Officer Laura Pendergest-Holt.

The FBI is also reportedly pursuing a criminal investigation of Stanford's businesses.

The SEC announced its action against Stanford on Tuesday, alleging that the flamboyant billionaire and his two colleagues perpetrated "a fraud of shocking magnitude that has spread its tentacles throughout the world."

In Latin America and the Caribbean, where much of Stanford's operations are based, depositors have since besieged Stanford bank branches, demanding return of their money only to be turned away.

The Venezuelan government on Thursday seized a failed bank controlled by Stanford after a run on deposits.

Stanford's offshore financial services operations were subject to the regulatory authority of Antigua & Barbuda, the tiny two-island Caribbean nation that the 58-year-old Texan adopted as his second home and lavished with millions in sports promotions.

The SEC charged that Stanford's investment scheme misrepresented the security of depositors' funds with "materially false historical performance data" to back promises of improbably high interest returns on those investments.

The action came less than two months after the collapse of Wall Street financier Bernard Madoff's $50-billion investment scheme. Madoff, 70, has been under house arrest at his luxury Manhattan apartment since Dec. 11, accused of running a Ponzi scheme.

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carol.williams@latimes.com

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