Stanford scandal trapsLatin American clients

Venezuelans sunk as much as $3 billion into the Antigua-based Stanford International Bank, about a third of the money U.S. regulators hope to recover as they pursue their fraud case against the bank's Texas billionaire founder.

Many wealthy Latin Americans seek safe havens and tax shelters for their savings outside their own countries, but Venezuelans had particular reason to be lured by R. Allen Stanford's promises of returns as high as 14 percent.

Inflation of more than 30 percent, devaluation fears and uncertainty about the projects of President Hugo Chavez drove many to save dollars or euros abroad. Stanford seized the opportunity, opening banks across Venezuela that helped draw clients to his Antiguan headquarters.

"I've seen it many times: Wealthy Latin Americans are concerned about stability in their countries or in their currencies and they're looking for a way to get their money out," said Ellen Zimiles, an expert in fraud risk management. "But no place is totally safe."

Despondent customers, some on the verge of tears, took numbers as they waited inside Stanford's high-rise offices in Caracas on Thursday, where a local bank had taken deposits but also attracted money to Antigua.

"I'm very worried. The little I had saved for my retirement I had there," said Giuseppe Faitanzzi, 75. "They only told me they had my money frozen and I couldn't take it out."

Fear of losing everything

Other concerned investors from Venezuela, Mexico and Colombia trudged through the doors of the Stanford International Bank in Antigua, only to be turned away. Some arrived in chauffeured luxury cars, while others walked from Antigua's nearby airport, dragging their luggage up the bank's ornately landscaped driveway.

"We suspect we may lose everything," said businessman Enrique Restrepo, part of a contingent of Venezuelans who came to Antigua to try to withdraw their money.

Venezuelans contributed up to 37 percent of the Antigua bank's estimated $8 billion in assets. The U.S. Securities and Exchange Commission now wants a federal receiver to recover and control as much of that cash as possible as it pursues a civil fraud suit against Stanford, the Antigua-based bank and two other executives and companies.

Stanford was tracked down Thursday by the FBI in Fredericksburg, Virginia, where agents served him with civil legal papers at the SEC's request. He has not commented publicly since the SEC filed charges on Tuesday.

But his father, James Stanford, told The Associated Press in Mexia, Texas 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."

Venezuela's victims include many "normal upper middle class mom-and-pop Venezuelans," said Caracas money manager Russell Dallen, who has long been suspicious of Stanford.

"Clients would come over saying 'Stanford is offering us 14 percent on our money.' And I would be amazed," said Dallen, who heads Caracas Capital Markets, a joint venture with the Venezuela’s BBO Financial Services.

Improbable returns

The SEC said the alleged fraud involved a pattern of secrecy and promises of "improbable" returns on certificates of deposit held at the Antigua-based bank, which has affiliates in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela. Stanford-affiliated banks that are not part of the SEC's complaint also have been affected.

Mexico's banking regulator on Thursday said it was monitoring a local Stanford mutual fund distributor, after a note posted on the unit's shuttered office door announced all accounts had been "temporarily frozen."

"I can't access my funds, I can't even get into the building" said Laura Zapata, a longtime Mexican soap opera star who said she'd invested her life savings there at her uncle's suggestion.

Venezuela's government meanwhile seized temporary control of Caracas-based Stanford Bank Thursday after panicked clients withdrew $93 million, or 42 percent of deposits this week.

The bank will immediately be put up for sale, and the government will guarantee the savings of 15,000 customers, Finance Minister Ali Rodriguez said, noting that "some groups have already expressed interest in acquiring this bank."