The hunt for Stanford | The Internet whistleblower | Leading article | Mike Atherton | Why investors fell for it | Run on the banks | SEC charge in full | Graphic: Stanford's wagon wheel

In his one-room office delicately positioned above a North London hair salon and next to the local chip shop, Charlesworth Hewlett diligently pored over his work.

Each year for a decade the ageing accountant and former RAF serviceman put his signature on the audit of the $50 billion business affairs of the international financier and cricket sponsor Allen Stanford.

Last night his work was at the centre of an international investigation after the US financial regulator claimed that Mr Stanford’s main business was a “massive, ongoing fraud”.

Stanford affair leaves sportsmen at sea

Suspicions that money could be tainted will be haunting agents and sports executives, as well as the Texan's customers

• Hunt for Allen Stanford and his billions

• Sky-high returns that investors found hard to resist

• Giles Clarke left in line of fire over fallout from Allen Stanford

Stanford: a sorry tale of greed and shame

It is not good enough to say that the ECB's contract with the Texan was signed with 'the best of intentions', says Mike Atherton

• Fallout from Allen Stanford affair leaves top sportsmen confused

• Game was used as a rich man's plaything. Its fawning bosses got what they deserve

• ECB leadership has much to answer for

Multimedia

• Should Clarke resign from the ECB?

• Is this the end for Allen Stanford?

Related Links

• Profile: Alex Dalmady, the internet whistleblower on Allen Stanford's alleged fraud

• Queues and panic in rush to withdraw money

• Hunt on for Stanford and his missing billions

Hundreds of savers queued outside branches of the Stanford International Bank (SIB) across the Caribbean and Latin America in a desperate attempt to withdraw their money as details of the alleged fraud spread.

The crisis that threatens to engulf the region became public on Tuesday when federal agents raided the Texas headquarters of the Stanford Financial Group, of which SIB is part.

Public concern turned to panic when the US Securities and Exchange Commission (SEC) froze Mr Stanford’s assets and released details of the charges against him and two senior colleagues on Tuesday night.

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” said Rose Romero, regional director of the SEC office in Fort Worth, Texas, last night.

Mr Stanford’s bank had sold investors $8 billion (£5.6 billion) of “certificates of deposits” on the basis that they would be invested in safe, highly liquid assets but produce a far higher rates of return than rivals, it is alleged.

The regulators claim that the money is actually invested in high-risk property and private equity schemes. They also claimed that a $1 billion fund called the Stanford Allocation Strategy had been sold using false and misleading historical data.

One of the biggest alleged frauds in banking history had been stumbled upon accidentally late last year by Alex Dalmady, a Venezualan financial analyst, when he was doing a favour for a friend who planned to invest in Stanford International Bank.

SIB, based in the former British colony of Antigua, seemed a safe bet. It boasted 30,000 clients in 131 countries, had $8.5 billion in assets and was part of a group claiming to oversee $50 billion in assets.

Within hours Mr Dalmady, 48, had warned his friend that there appeared to be a gaping hole in the bank’s account. “I was stunned. First, it looked so simple, so unsophisticated,” he said. No matter how hard he tried, he could see no way in which SIB’s business model could produce the returns that it claimed to or fund the dividends that it was continuing to pay its investors. When his findings were published in a Venezuelan magazine the regulators took notice.

Mr Stanford, the chairman and sole shareholder of SIB, refused to appear or give evidence to the investigation. Laura Pendergest-Holt, his chief investment officer, and James Davis, his right-hand man, also refused to be questioned. Last week there was a crucial breakthrough when a lawyer used by the bank informed the regulators that he wanted to withdraw all the evidence that he had given so far.

The lawyer is reported to be Thomas Sjoblom, an expert in financial fraud who had previously worked for the Securities and Exchange Commission for 20 years.

By Monday night the regulators believed that they had enough information to act.

In Antigua, which Mr Stanford has transformed into a regional banking centre, the impact of the regulator’s raid was devastating.

The island’s Prime Minister, Baldwin Spencer, admitted that the charges against the island’s largest employer could have “catastrophic” consequences but urged the public not to panic. They ignored him and by mid-afternoon more than 600 people were queueing outside the Stanford-owned Bank of Antigua.

During the day, the scene was repeated across the region.

As the regulators attempted to untangle Mr Stanford’s network of companies the financier disappeared. Reports suggested that he had failed to hire a private jet to fly from Houston to Antigua when the company refused to accept his credit card.

In the past decade Mr Stanford, 58, has travelled the world spreading charm and dollars, buying influence and prestige.

He has showered Washington politicians from both parties with contributions. A $4,600 donation to Barack Obama’s presidential campaign followed payments of $28,000 to his rival John McCain over the years.

Since 1989 his company’s political action committee and its employees have given $2.4 million to candidates and their political action committees.

On his company’s website a video shows Mr Stanford delivering welcoming comments in a room including Nancy Pelosi, the Democratic House Speaker, Madeleine Albright, the Clinton-era Secretary of State, and Howard Dean, then the chairman of the Democratic Party.

He has also played an increasing role in sports, including endorsement relationships with the golfer Vijay Singh and the England footballer Michael Owen.

In Antigua he was rewarded with a local knighthood for his contribution to the island’s business.

After transforming West Indies cricket with his financial largesse he lured England to the Caribbean with the offer of a million-dollar-a-player winners-take-all game against his All Stars last October.

He unveiled the plans in suitably flamboyant style by arriving by helicopter at Lord’s. The competition was a publicity disaster with Mr Stanford astounding the cricket world when he was accused of being too familiar with the pregnant wife of the England cricketer Matt Prior and the girlfriend of his team-mate, Alastair Cook.

But behind the flamboyant businessman there was always the conservative accountant. Every year Charlesworth Ashton Shelley Hewlett duti- fully signed off company accounts as correct. When the regulators started investigating Mr Stanford they had difficulty understanding why he used a company based in a two-room office in Antigua which contained just an old typewriter and an eight-year-old telephone book.

Outlining the civil case against Mr Stanford the Securities and Exchange Commission noted: “SIB’s accountant, CAS Hewlett & Co, a small local accounting firm in Antigua is responsible for auditing the multibillion-dollar SIB’s investment portfolio.

“The commission attempted several times to contact Hewlett by telephone. No one ever answered the phone.”

Perhaps it should have tried the London headquarters of the accountancy firm. Post for CAS Hewlett & Co is still delivered to the 20ft by 20ft room at the back of a 1930s block shared by five other companies.

Jeff Wynne, who runs a property services company in the office opposite, recalled that Mr Hewlett mostly worked on his own, although a colleague sometimes joined him.

“He was a nice old boy,” he said, “He had a few clients, but it was not much. He would spend a couple of weeks here and then a few months working in Antigua.” As he grew increasingly frail Mr Hewlett moved his business to his nearby home where he lived with his wife, Delvine, 69.

Since Mr Hewlett’s death at the age of 73 last month the business has passed to his daughter, Celia, who lives in Enfield, North London.

Last night Ms Hewlett refused to comment about the allegations.

david.brown@thetimes.co.uk

Times Recommends

• African migrants desperate for a better life
• Karzai, the Anglophile who alienated the West
• They killed my family, but I rise again