The problems at Banco Espirito Santo SA (ELI:BES) may be deeper than originally thought with the detention of Ricardo Espirto Santo Salgado, the bank’s patriarch and former CEO, by authorities in Portugal Thursday.

Banco Espirito Santo Ricardo Espirto Santo Salgado

Banco Espirito Santo was being held for money-laundering and tax evasion probe

Salgado was being held for questioning as part of a three-year money-laundering and tax evasion probe conducted in conjunction with a wider investigation of the relationship between Swiss wealth managers and Portuguese customers, the Wall Street Journal is reporting.

Salgado exited Banco Espirito Santo SA (ELI:BES) earlier this month as the stock price tumbled nearly 380 percent as hidden financial problems were uncovered at the bank’s holding company, Luxembourg-based Espírito Santo International SA.

An audit revealed the bank was in dire financial condition and found irregularities in its accounts. Espirito Santo International subsequently filed for bankruptcy protection last week, followed by the main unit, Rioforte Investments SA, filing for protection this week.

Salgado sat on the board of directors for Luxembourg-based Espirito Santo International until last March, the Journal reported.

Detention intensifies problems for Espirito Santofamily

The detention intensifies the problems faced by the Espirito Santo family, which is fighting to hold on to its business empire following discovery of the material irregularities, the Guardian noted. The stock had endured a significant slide lower from a five year high of $3.28 in February 2011 to bottom at 0.46 cents on May 31, 2012. From there the stock rebounded slowly. In January of 2013 Salgado was reported to have been a voluntary witness in the investigation and said he had always paid his taxes and was not a suspect. The stock crescendoed to $1.05 at the end of the month, ultimately climbing to $1.42 in February of this year. Then the investigation started to uncover problems, leading the stock price on a freefall, where it is currently trading near $0.60.

With blood all over the street and few shoes left to drop, some hedge fund players may be entering the waters. As reported in ValueWalk, Baupost’s Seth Klarman recently acquired a 2.27 percent stake the beleaguered stock.

Separate speculation is hedge funds may consider the realistic low to hover around the $0.50 range with a three to five year potential time horizon for an upside near $1.40.