A businessman whose firm helped to look for Madeleine McCann has been arrested after a hotel manager recognised him as an alleged fraudster wanted by US authorities.

Kevin Halligen, 48, had been staying at the Old Bank Hotel in Oxford for several months under an assumed name.

He was arrested there on Tuesday following a discrepancy over his hotel bill.

The hotel manager had seen a newspaper report last weekend concerning the alleged fraud and realised the man pictured alongside the article was his customer. Halligen was taken into custody in the city, where he remains.

The Old Bank Hotel in Oxford where Kevin Halligen was arrested Full Image

The US Department of Justice had issued an indictment for Halligen, from Surrey, earlier this month, alleging he tried to defraud a London law firm of 2.1 million dollars (£1.2 million).

David Harris, finance director of the luxury hotel in Oxford's High Street, said: "On Tuesday, the manager of the Old Bank contacted local police concerning this man called Kevin Halligen. He was known to us as Richard Hall. He had an outstanding bill of less than £5,000. To us, he was just an ordinary, well-behaved guest until the newspapers disclosed more at the weekend."

Halligen's firm, Oakley International, was used by Madeleine's parents Kate and Gerry for around six months last year to look for their missing daughter.

It is understood a court hearing relating to an extradition matter could now take place.

In the indictment, the US Department of Justice alleged Halligen conned a London-based law firm. It is alleged he claimed the money was to help secure the release of two business executives from the Dutch company Trafigura, who were arrested in the Ivory Coast. Halligen is accused of using the funds for his own benefit including buying a mansion in Virginia.

Washington-based Oakley International was paid around £300,000 by backers of Madeleine McCann's parents to help look for the child after she went missing from an Algarve resort in May 2007 at the age of three. The six-month contract saw the firm hire other private detectives, set up a hotline and process information. The firm had initially been given a £500,000 contract, but the McCanns terminated the arrangement before paying any more fees.