The FBI made the first arrest in the $8 billion Stanford Financial Group fraud investigation on Thursday, detaining chief investment officer Laura Pendergest-Holt on federal obstruction charges.

The U.S. Justice Department said Pendergest-Holt was to make an initial court appearance before a U.S. magistrate in Houston on Friday after her arrest by FBI agents. The federal criminal probe began in June 2008.

The break could signify that prosecutors are closing in on the group's chairman, Allen Stanford, a Texas billionaire with dual U.S. and Antigua Barbuda citizenship who has been a prominent sponsor of cricket, golf, tennis and polo events.

Stanford is already facing civil charges accusing him of orchestrating a "massive" fraud in the sales of $8 billion in high-interest certificates of deposit issued by the Antigua-based Stanford International Bank.

The Justice Department said Pendergest-Holt concealed her role in and familiarity with the Antigua bank's investments when Securities and Exchange Commission investigators questioned her earlier in February.

The SEC filed civil charges against Stanford, Pendergest-Holt and chief financial officer Jim Davis on Feb. 17. A court-appointed receiver took control of Stanford's assets.

In all, Stanford claimed to oversee about $50 billion in assets but the criminal complaint quoted a company lawyer as saying the SEC told him it was only interested in the certificates of deposit.

Pendergest-Holt's attorney, Brent Baker, said after the arrest that "she is looking forward to having the truth come out and to putting this whole affair behind her as soon as possible."

The complaint against Pendergest-Holt said she failed to tell investigators she had served on the Antigua bank's investment committee and that the investment portfolio holding more than 80 percent of its assets included a $1.6 billion loan to Stanford "Executive A" -- evidently Stanford himself.

It said Pendergest-Holt also wrongly denied she had prepared with company officials before her SEC interview on Feb. 10 and said a Stanford attorney had sought to keep the top executives from being questioned.

"THE PARTY IS OVER"

The complaint details sometimes stormy preparation sessions for Pendergest-Holt in January and February during which the bank's shaky asset base became apparent to a wider circle of officials and to the lawyer -- "Attorney A" -- who later quit.

During those preparations, the complaint said, Pendergest-Holt and other officials learned of the $1.6 billion loan and that $541 million credited as a capital contribution in December 2008 consisted of assets already bought by the bank just months before for $88.5 million.

It described "Executive A" -- Stanford -- as "pounding the table" and insisting "the assets are there."

The next day, Feb. 6, one of the participants broke out crying and threatened to go to the authorities. The attorney declared "the party is over."

A source familiar with the case said Stanford had not retained a lawyer as of earlier this week and that paying for legal help was a problem because of the asset freeze.

There were reports last week, after Stanford was served in Virginia with the civil papers, that he had hired high-profile Washington lawyer Brendan Sullivan. But the official said: "You would not get Brendan Sullivan to take a charity case."

Davis, he said, was in talks on arranging representation.

SEC Deputy Enforcement Director Scott Friestad said after Pendergest-Holt's arrest: "We appreciate the quick and decisive action of the Department of Justice and the FBI, and thank them for their fine work and cooperation in this matter."