Eight people were arrested Tuesday in raids by Spanish police as part of an ongoing fraud investigation involving two prominent stamp collection companies.

The companies, Forum Filatelico and Afinsa Bienes Tangibles, are accused of defrauding nearly 200,000 mostly retired investors in a pyramid scheme involving overvalued stamps. Afinsa Bienes Tangibles is the world's No. 3 collectibles firm behind Sotheby's and Christie's.

Afinsa Bienes Tangibles was recently the subject of a Barron's magazine investigation, which found that its stamps were likely overvalued and that proceeds from sales to new investors were being used to pay returns to other investors. Barron's also reported that Lloyd's of London, Afinsa's insurer to the tune of $1.5 billion, might pull their backing over the allegations of improper practices.

The operation forms part of a joint investigation launched by the National Court, tax authorities, financial crime prosecutors and the National Police over an alleged pyramid-type scheme based on overpriced stamps and other collectibles.

The prosecutor's office said in a statement that Spanish authorities are conducting more than 20 searches at company offices and private residences. The prosecutor's office also said it plans to make "several arrests" as part of a lawsuit against the two companies on charges ranging from tax evasion and money laundering to criminal insolvency and falsification of documents.

Afinsa has also been linked to an investigation of a significant stamp collection sale at the United Nations.

Click here to read FOXNews.com's coverage of the sale of the U.N. stamp collection.

The Madrid-based company is majority owner of the Escala Group (ESCL), formerly known as New Jersey-based Greg Manning Auctions, with a 67 percent stake, or 18.2 million shares as of March 2006.

In a statement issued Tuesday, the Escala Group said it had suspended operations while authorities collect documents from its offices and question its officers.

"At this time, Spanish authorities have not advised the company as to the nature of the investigation," the company said.

An armed National Police officer guarded the back entrance of Afinsa's plush headquarters in an upscale neighborhood of central Madrid, while a steady stream of employees were leaving the building.

Several Forum Filatelico and Afinsa employees, who were outside their respective headquarters in Madrid while National Police officers searched the premises, said they weren't aware of any improper activities within the companies.

Escala is scheduled Tuesday to release earnings for the third quarter of its 2006 fiscal year, after markets close in the United States.

In 2003, Manning purchased an archive of valuable U.N. stamps from Arthur Morowitz, CEO of a Manhattan-based firm called Champion Stamp Collection.

The stamps were initially sold to Morowitz at in auction in Geneva for $3,068,000 — hailed on a variety of stamp collecting Web sites as a world record price for a single lot sale at a stamp auction. After purchasing the lot from Morowitz, Manning put up for sale the collection's most valuable pieces.

The more than 2,000 items ranged from artists’ drawings for the earliest U.N. stamps in 1951, to approved models for special anniversary issues, to unique rarities celebrating peacekeeping operations and national member states. Stamp industry insiders say that the auction brought in $1.2 million, a figure Manning has declined to confirm.

But according to a U.N. investigation, the stamps should never have been sold in the first place. According to U.N. sources, the archive sale may have taken place without the permissions required by the regulations of the U.N. Secretariat for the disposal of such important U.N. property.

Senior U.N. officials contacted by FOX News professed to know nothing about the sale, including some in departments specifically charged with approving or blocking the dispersion of U.N. historical material.

U.N. regulations issued in 1991 by then Secretary-General Javier Perez de Cuellar, and still in effect today, declare that U.N. historical materials, which undoubtedly include the postal archive, are deemed “inviolable” by the world organization. Without explicit permission, their removal from U.N. premises is expressly forbidden.

The 1991 regulations also explicitly state that the chief archivist should make the judgment on “which records have sufficient historical or other value to warrant their continued preservation as the archives of the United Nations.” Click here to view the Secretary General's Bulletin (pdf).

The audit report on the stamps sale has not yet been “finalized,” meaning it is soon to be submitted to senior U.N. managers for comment before being handed on to Secretary-General Kofi Annan, and the U.N. General Assembly.

The Associated Press contributed to this report.