NEW YORK (Reuters) - Texas billionaire Allen Stanford's offshore bank, which is under federal investigation, recently curtailed financing commitments to two small firms, The Wall Street Journal reported on its Web site on Saturday, citing regulatory filings.
Stanford International Bank Ltd. of Antigua failed to provide $16 million in funding to a telecommunications firm in Florida and an Alabama health-care company said it could not complete a $62 million merger when funding fell through.
According to the healthcare firm called Emageon Inc., Stanford had planned to provide the funding to complete the deal, the Journal reported. Stanford spokesman Brian Bertsch declined to comment to the newspaper.
The new disclosures raised further questions about the activities of the off-shore bank of the Stanford Group Co's $50 billion financial empire. Investigation of Stanford's investment bank expanded to the Caribbean island of Antigua on Friday, where regulators planned to quiz executives of the offshore unit at the request of U.S. regulators.
The intensified scrutiny comes at a time when Bernard Madoff's suspected $50 billion fraud has put regulators and investors on high alert for any whiff of wrongdoing.
The U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority are examining sales of certificates of deposit by Stanford, and steady, above-average returns those investments have been paying, a person familiar with the matter said earlier this week. State regulators in Florida and Texas are also looking into the matter.
The telecommunications firm, which the Wall Street Journal said was losing $16 million in financing from Stanford, is Elandia International Inc., of Coral Gables.
According to U.S. regulatory filings, Stanford owns more than 10 percent of Elandia and New York technology and services company Health Systems Solutions Inc, both of which trade over-the-counter on the Bulletin Board or pink sheets.
The Journal reported that Elandia controls a collection of small telecommunications firms in Latin America and the South Pacific, and that regulatory filings show its chief financial officer is James Davis, who holds the same position in Stanford International Bank and the Stanford Financial Group.
Elandia said in a new SEC filing that the off-shore bank had agreed to convert an outstanding $12 million loan it made to Elandia into shares of Elandia equity, the Journal said, noting that such debt-equity swaps often occur when borrowers lack cash to repay loans.
Attempts to contact Elandia executives were not successful, the newspaper added.
The Journal reported that Stanford owns a majority of the shares of Health Systems Solutions Inc. In October, the firm agreed to acquire Emageon Inc. of Birmingham, Alabama in a deal that was halted on Friday. Emageon cited the inability of Health Systems to obtain funding on or before the closing deadline of February 11 as the cause, the Journal said.
Executives of Emageon could not be reached and Health Systems executives did not respond to requests for comment, the newspaper said.
(Reporting by Chris Michaud, editing by Anthony Boadle)
