MEXIA, TEXAS Feb 19 (Reuters) - When Billie Stanford heard that the Federal Bureau of Investigation had found her stepson Allen Stanford, the billionaire Texan facing a federal fraud charge, she and her husband thanked God.
"That is one relief off of our minds. We're so pleased and thankful to the Lord that he's alive, and healthy, I'm sure," Stanford, 73, told Reuters.
Now begins the hard part. Stanford faces U.S. Securities and Exchange Commission accusations that he engaged in an $8 billion fraud. The SEC has charged Stanford, two of his colleagues and three of his companies.
His parents do not believe that Stanford defrauded investors, but they cannot say that it did not happen.
"I can't believe that he has, but I won't say 'no,'" said James Stanford, 81, sitting at his desk in a small office in the east-central Texas town of Mexia (Muh-HAY-uh), where Allen Stanford was raised.
"I'll defend him. We love him and support him, but he should do the right thing and come forward," the elder Stanford said. "Don't run and hide. God damn, don't do that."
Earlier on Thursday, Stanford's father said he knew nothing about the SEC's accusations against his son. He said he did not know where Allen was.
Later in the day, FBI agents found Stanford in Fredericksburg, Virginia. Billie Stanford said that he had not yet called his father.
James Stanford, chairman emeritus of Stanford Group Co, has received a subpoena and is due to testify for the SEC next week in Waco, Texas.
STANFORD EMPIRE STARTED IN 1932
Before Allen turned it into an empire, the company, founded in 1932 by James' father Lodis, sold insurance.
Allen took over in 1993. His father has participated in board meetings, but is not involved in day-to-day operations.
Another board member who served in a similar capacity is former Mexia car dealer Oliver Goswick. Goswick, known as "O.Y.," lives in Mexia with his family. He has also been subpoenaed.
His son, Richard Goswick, said that neither James Stanford nor his father would have known what Allen Stanford was doing as head of the Stanford International Bank (SIB). SIB is based on the West Indies island Antigua.
Richard said that James and his father served as board members in an essentially honorary capacity.
He said of his father: "If he thought there was anything wrong, he would have divorced himself from the relationship."
"These are churchgoing, small-town people," said Richard Goswick, 63, who owns the Dick Scott Ford dealership in Mexia.
O.Y. Goswick was a General Motors serviceman and an auto dealer proprietor after leaving the U.S. Air Force, his son said. He said his father had a high school education and was not a sophisticated financier. "His mental capacity at his prime could never conceive of something of this nature," he said, referring to the alleged fraud.
In 2000, Goswick suffered a stroke and his health has worsened since then, his son said. He cannot communicate, and can walk only short distances. His son has a doctor's note explaining the elder Goswick's condition, and he plans to send it to the SEC. First, he said, he must hire a lawyer for his father.
Goswick said he had met Allen Stanford occasionally over the years, and considered him an intelligent, charismatic man who dressed well and ran a company with an eye on cleanliness as well as success. "You couldn't even be employed by Allen if you smoked," he said, adding that even the hangar where Stanford's planes were stored, was immaculate.
NO GLITZ AT MEXIA OFFICE
The building is simple, white walled with low ceilings and a gabled roof. Like Mexia, there is nothing flashy. James Stanford wore a black suit jacket, blue shirt and black pants when we met at his one-floor office there. He uses a walker.
He wears a brace on his neck and his head leans forward when he speaks, but his sharp eyes really do all the talking.
James said his office has no dealings with Stanford's business. Instead, it is a place for him to go besides home.
James has been working there for 25 years. A picture of him and his son, smiling in the same office, hangs on a wall.
He said he was asked not to talk to the press, but he did not say by whom. He has been giving interviews anyway.
James said he knew nothing of his son's business dealings today. But, in the late 1990s, he said, a Mexican customer of Stanford put $3 million into the bank for investment purposes. U.S. Drug Enforcement Administration (DEA) agents then approached Allen Stanford and said the money was from a Mexican drug cartel and had been laundered several times.
James said that Allen had told the board about this, and that he had "refunded" the money to the U.S. Treasury. He said: "Allen worked with them, hand in glove."
The last time he spoke to his son, he said, was a week ago. James said that during that conversation, Allen intimated that the company was in trouble, but he would only tell his father to read The Wall Street Journal.
NO HOMETOWN HERO
In a town of fewer than 11,000 people, residents know who Allen Stanford is, but most do not know him well. He left with his mother when he was 9 years old after she and James Stanford divorced. He graduated from high school in Fort Worth.
After starting a health club in Waco that failed, Stanford left the United States, Richard Goswick said.
He said Allen Stanford then met a lawyer with connections in Antigua, where Stanford now has dual citizenship.
Stanford bought many houses and apartments, flipped them for higher prices and worked his way into serious money in Houston. The metropolis lies about 165 miles and a world away from the dusty, sparsely populated streets and many empty brick front stores of Mexia.
Bob Wright, editor of the Mexico News, said Allen Stanford "always had an entrepreneurial spirit."
That included selling his old bicycle to his neighbor, Jo Bennett, when they were both about 10 years old, Bennett, 58, recalled. "We were just little kids."
Though few say they know Allen Stanford well, the Stanford family's history is intertwined with the history of Mexia. James Stanford served several terms as the town's mayor. Even when Allen Stanford's mother sold her house, the real estate agency that Bennett works for handled the sale.
Except for visiting his parents and helping his mother to sell her house a month or two ago, Allen Stanford has not been much of a presence in Mexia.
"Not that many people knew him," said Dick Flatt of Flatt Stationers Inc. "Stories would come from time to time over the wire about how he done good, made another million in Houston."
"We thought maybe he was down in Venezuela somewhere," he said, laughing. (Reporting by Robert MacMillan; Editing by Toni Reinhold)