(Reuters) - A whistleblower contacted U.S. regulators more than five years ago alleging that businesses of Allen Stanford, the Texas billionaire charged last week by U.S. securities regulators with an $8 billion fraud, were involved in an “illegal Ponzi scheme,” the Financial Times said.

Leyla Basagoitia, a former Stanford employee, raised a series of red flags about the tycoon’s empire in a 2003 employment dispute with her company at a tribunal run by the finance industry’s self-regulatory body, the paper said citing her lawyer.

Basagoitia also alerted the U.S. Securities and Exchange Commission at about the same time, her lawyer said, echoing criticisms the agency ignored early warnings about the alleged $50 billion Ponzi scheme run by Bernard Madoff, the paper added.

Basagoitia told an arbitration panel at the National Association of Securities Dealers in October 2003 that she suspected that Stanford Group Company was “engaged in a Ponzi scheme to defraud its clients,” the paper said citing case documents.

The SEC did not immediately reply to a Reuters email seeking comment that was sent outside of normal business hours.

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