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02/21/09 - ST. JOHN'S, Antigua -- Regulators in the Caribbean took over Antiguan banks owned by Texas financier R. Allen Stanford on Friday, hoping to contain damage to the local economy as U.S. investigators explore an alleged fraud scheme involving billions of dollars.

The Bank of Antigua suffered a run on deposits, even though it has not been named in the fraud complaint by the U.S. Securities and Exchange Commission. A failure of the local bank could have severe consequences in the twin-island nation of Antigua and Barbuda, the Eastern Caribbean Central Bank said in explaining its intervention.

The SEC complaint filed Tuesday focuses on the billionaire's offshore investment bank, Stanford International Bank Ltd., where an estimated $8 billion is now being controlled by a team of accountants working for Vantis Business Recovery Services. Antigua's banking regulatory commission said it appointed the British firm as receiver to protect ''the reputation and integrity'' of its banking sector.

Private international banking has been used worldwide to protect assets from economic crisis, hyperinflation, political instability and high taxes. Such ''cross-border assets'' reached $4.6 trillion in June 1999, with $900 billion, or 20 percent, stored offshore in some 13 Caribbean island nations, according to the most recent data available from the International Monetary Fund.

U.S. authorities allege that Stanford lured these clients by promising unrealistic returns on certificates of deposit and other investments.

Stanford was warmly welcomed in 1990 as Antiguan politicians sought to diversify their tourism-dependent economy. He also has had considerable influence in Washington, where his campaign donations, mostly to Democrats, reached a peak as efforts to strengthen financial regulations died in the Senate.

On Friday, Ralph Janvey, Stanford's court-appointed receiver, whose job is to take over operations and garner assets, said in a statement that those who got political contributions ``are encouraged to transfer such funds back to the receivership estate.''

But how much he may get back remains to be seen. For example, a spokesman for Sen. Bill Nelson, a Florida Democrat, who received $45,900, said, ``We've selected a charity to send an amount equal to $45,900 in campaign contributions associated with Stanford. But we're also seeking guidance on whether it can be returned to the Stanford company's court-appointed receiver.''

As the SEC and the FBI pursue civil and criminal probes of Stanford's vast holdings, jobs are in jeopardy across Antigua, an island of some 80,000 people where rolling green hills are dotted with palm trees.

Foreign investors who went to Stanford's white-columned international bank near the airport Friday in hopes of getting cash came away instead with a flier informing them about the bank's new receivers. But some depositors were standing by Stanford as a man who has done many good things for Antigua.

Sandra Cox, a 42-year-old jewelry store employee, said she doesn't believe the allegations and won't withdraw her money.

''You get somewhere in life and they always try to bring you down,'' she said. ``I can't see him doing something like that.''

Still, experts say Antigua's lax regulations make it vulnerable to fraud, money laundering and other crimes.

''Why did this foreign money go there in the first place? You have to offer something they can't get at home and Antigua offered no regulation,'' said David Marchant, an offshore banking analyst in Miami, who publishes the OffshoreAlert newsletter. ``In their greedy desire to avoid paying a 15 to 20 percent tax, they put their money with an offshore crook who ultimately taxed them 100 percent.''