Controversial businessman Andre Curtis' arrest was a result of an investigation by Bermuda authorities, it emerged last night.

Montana State Auditor's Office — which lists 24 violations against Mr. Curtis for his part in an alleged worldwide $4 million fraud — says it neither prompted last Thursday's arrest nor asked for it.

However, authorities on the Island are maintaining their silence over what action is being taken regarding the catalogue of allegations against Mr. Curtis, who is Premier Ewart Brown's political campaign manager.

The Royal Gazette understands Mr. Curtis was arrested on Thursday last week and spent two days in custody although, despite the fact his arrest has been reported by every major news outlet on the Island, Police are refusing to officially confirm it happened.

Last night, some light was finally shed on the subject by Montana's specialist assistant attorney general Roberta Cross Guns.

"Mr. Curtis' arrest may be tangentially related to our investigation, but it was not orchestrated by us nor did we request it," Ms Cross Guns told this newspaper. "We believe the arrest occurred as a result of an investigation by Bermuda authorities that parallels our investigation."

One possible source of the local investigation is Bermuda Monetary Authority.

Earlier this month it emerged Mr. Curtis' company Harvest Investment Holdings was falsely claiming on its website to be licensed by BMA to provide a series of services.

The website has since been removed, but BMA says it is not able to say whether it is investigating the firm for confidentiality reasons.

Deputy Premier and Finance Minister Paula Cox last night referred this newspaper to Bermuda Police Service, which in turn refused to break its silence.

Montana yesterday also released further details about the alleged Ponzi scheme, in which Mr. Curtis' company is said to have received nearly $2 million from one Illinois-based investor who was falsely promised a 66 percent return within 25 days.

The 13 alleged victims are from across the United States and Europe, while unsuspecting intermediaries from Europe and South Africa have also been sucked in.

According to the Montana auditor, investors were told a $100,000 investment would earn them at least $30,000 a week, with a total return of more than $5 million by the 40th week.

They were told to wire funds to various brokerage firms in the US and Bermuda.

The Securities Department says that, instead of trading US Treasury zero coupon bonds as promised, investors' cash was deposited into accounts owned and controlled by Mr. Curtis and fellow respondents convicted money launderer and fraudster Daniel Two Feathers, Shawn Swor, Terrence Paulin, or their companies, before being wired to a Swiss bank.

None of the investors have received any return on their investments. Accounts used by the four respondents have now been frozen.

Ms Cross Guns said Mr. Curtis would not be extradited as a result of its administrative action because it is not a criminal action, but he may be extradited by federal authorities.

Mr. Curtis faces fines of up to $5,000 for each violation, a possible total of $120,000, while victims will also have to be repaid huge sums of cash.

Harvest Investment Holdings also faces maximum $5,000 fines for the 23 violations it faces.

Explaining how the cash will be recuperated, Ms Cross Guns said: "Under the Montana Securities Act, if there is a finding that Andre Curtis has engaged in securities fraud from Montana, as we allege, the resulting fine is a lien against any property he may own.

"There will be a process to collect against that due to the international nature of this case.

"But we have ways to ensure we will collect against his assets. Certainly if he has any assets held in any of the accounts we have frozen those assets will first go to pay restitution and then to pay fines imposed as a result of this action."

Mr. Curtis is the branch manager of the Premier's Warwick South Central Progressive Labour Party constituency.

He has come under strong criticism in Bermuda for repeatedly refusing to say what he did with hundreds of thousands of taxpayers' dollars allocated to Harvest Investment Holdings for the faith-based tourism initiative in 2007/08.

Dr. Brown, who has spoken out in support of Mr. Curtis as a "wonderful person" when he has courted controversy in the past, has not replied to any requests for a comment since the alleged Ponzi scheme was first reported two weeks ago.

PLP chairman David Burt has repeatedly refused to comment when asked how the allegations affect Mr. Curtis' position within the party.