Authorities were trying to track down Texas billionaire financier Allen Stanford on Thursday as fraud charges against the cricket promoter prompted panicked investors to withdraw cash from his banks.
Venezuela took control of a local bank owned by Allen Stanford, who faces U.S. fraud charges, a government source said on Thursday as the impact of the American case spread through Latin America.
In recent days, depositors worried the trouble at Stanford International Bank would hurt Stanford Bank Venezuela and withdrew cash from the small local bank even though the companies' assets are separate, industry officials and bank customers said.
The government of President Hugo Chavez had sought to calm depositors' nerves, declaring on Wednesday the bank was healthy and even saying it was working to prevent a run on the bank.
Authorities in the Caribbean island of Antigua and in parts of South America meanwhile sought to quell fears among depositors as big queues formed outside branches of his bank.
The U.S. Securities and Exchange Commission, which charged Stanford and two Stanford Group Co executives on Tuesday with an $8 billion fraud, said it did not know where the flamboyant 58-year-old financier and sports entrepreneur was.
In Miami, the local NBC television station reported that Stanford Group offices there had been raided by federal authorities, a day after a similar raid at Stanford's U.S. headquarters in Houston.
The U.S. Attorney's Office and an FBI spokeswoman in Miami said their agencies had not been involved in the latest raid and referred calls to the SEC.
Stanford's operations in Miami and Baton Rouge, Louisiana, were being shut down by a court-appointed receiver, a source briefed on the matter said.
ABC News, citing federal authorities, reported the Federal Bureau of Investigation and others have been investigating whether Stanford was involved in laundering drug money for Mexico Gulf cartel.
Citing unnamed officials, ABC reported Mexican authorities had detained one of Stanford's private planes as part of the investigation, which has been going on since last year.
Officials said checks found inside the plane were believed to be connected to the Gulf cartel, one of Mexico's most violent gangs, ABC reported.
ABC cited authorities as saying Stanford could potentially 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 investigation.
From the tiny Caribbean island of Antigua, a key outpost in Stanford's business empire, to Andean nations Venezuela, Colombia and Ecuador, investors and depositors, most angry, some in tears, besieged his banks and companies to try to redeem funds or seek information about their savings.
In a region all too familiar with financial turmoil, market meltdowns and frozen bank accounts, the Stanford scandal has panicked investors who were already worried about the effects of the global financial crisis on their jobs and savings.
Many wealthy Venezuelans look to overseas accounts as a way of dealing with tough currency controls, soaring inflation and their concerns that socialist President Hugo Chavez is driving the oil rich nation towards Cuba-style communism.
At Stanford's Mexico City office, middle-aged women carrying Louis Vuitton and Carolina Herrera designer purses fiddled with flashy necklaces as they waited alongside Jewish men in skull caps, switching between Spanish and Yiddish as they spoke on their cellphones.
Stanford staff handed out statements that said Stanford accounts had been frozen and provided wire transfer instructions for clients who wanted to liquidate accounts. Some of those waiting in line wept into their cellphones.
Some said they did not know if their money was in Mexico or Houston or Antigua.
"All my capital is in this bank, and I don't know what I am going to do. They won't attend to us. They are locked inside. They don't want to talk to us," said Karyna Kleinckwort, a widow in her mid-thirties.
A substantial portion of Stanford's clients are in South America, where the Venezuelan government issued a request for more information from US authorities.
"They are wondering what will be done with Stanford Bank in Venezuela," Finance Minister Ali Rodriguez said Wednesday.
"At the moment we are investigating what repurcussions may have occured with the institution abroad, while at the same time we are asking US authorities about the real situation."
After the shock generated by the alleged $50 billion Ponzi scheme fraud blamed on Wall Street veteran Bernard Madoff, regulators sought to calm public fears about another major financial scandal at a time of global recession and banking failures.
In Colombia, a local affiliate of Stanford halted its activities on that country's stock exchange.
In Ecuador, the local Stanford affiliate was suspended for 30 days from operating in the Quito stock exchange, the bourse said.
While mystery surrounded Stanford's whereabouts, CNBC television reported that he tried to hire a private jet to fly from Houston to Antigua, but the jet lessor refused to accept his credit card.
The SEC accused Stanford in a civil complaint of fraudulently selling high-yield certificates of deposit from his Antiguan affiliate, Stanford International Bank Ltd (SIB).
Asked by reporters whether there would be more fraud cases of the scale and scope of Madoff and Stanford, U.S. Attorney General Eric Holder told reporters: "It's hard to say. I'd like to think that those are going to be the largest."
He declined to comment on why the Justice Department has not filed criminal charges against Stanford.
Asked if Stanford may be outside the United States, SEC spokeswoman Kimberly Garber said: "Certainly that's a possibility, but we don't know."