Houston – Texas Billionaire Under Investigation in Possible Next Biggest Ponzi Scheme

Houston – An offshore bank at the center of two U.S. federal investigations recently curtailed financing commitments to two small American companies, regulatory filings show.

Stanford International Bank Ltd. of Antigua recently failed to provide some $16 million in funding to a small Florida telecommunications firm, while a small Alabama health-care firm said it was unable to complete a roughly $62 million merger after funding fell through. Stanford International had previously planned to provide funding to complete the deal, according to the health-care firm.

Brian Bertsch, a Stanford spokesman reached Saturday, declined to comment.

The disclosures raise new questions about the activities of Stanford International Bank, part of a sprawling financial-services network controlled by Texas businessman R. Allen Stanford. As reported, the Federal Bureau of Investigation and securities regulators are examining the bank’s marketing of high-interest certificates of deposits through affiliates in Texas and elsewhere.

Some Stanford International representatives have been recently advising clients that they can’t redeem their CDs for two months, a person familiar with the matter said. The bank says it has over 30,000 investors and more than $8.5 billion in assets, though it also says the larger group of which it is a part manages over $51 billion in assets. A spokesman for parent company Stanford Financial Group, based in Houston and St. Croix, U.S. Virgin Islands, said depositors may withdraw funds in accordance with the terms of their accounts.

In a December letter to customers posted on its Web site, (stanfordinternationalbank.com) Stanford International described its investment politicies as “conservative,” saying it “had no indirect exposure to the securitized debt or subprime meltdown.” The bank also distances itself from the Bernard Madoff hedge fund scandal, in which a New York financier is accused of running a so-called Ponzi scheme that may have cost clients billions of dollars.

“We want our depositors to know that SIBL had no direct or indirect exposure to any of Madoff’s investments…Also, SIBL has never made a structured loan or a commercial loan. All loans are cash secured and to SIBL clients only at a maximum 80% loan to 100% cash collateral ratio.”

But SEC filings show that the Antigua bank also holds majority stakes in a handful of thinly traded American firms.

The Florida firm losing $16 million in financing from Stanford International is called Elandia International Inc. of Coral Gables, which trades over-the-counter on the so-called pink sheets. Elandia says it controls a collection of small telecommunications firms in Latin America and the South Pacific. Regulatory filings show that the Elandia’s chief financial officer is James M. Davis, who is also chief financial officer of both Stanford International Bank and Stanford Financial Group.

Efforts to contact Elandia executives by phone and e-mail were unsuccessful.

In a new SEC filing, Elandia also said Stanford International Bank had also agreed to convert an outstanding $12 million loan it had made to Elandia into shares of Elandia equity. Such debt-equity swaps often take place when borrowers lack the cash to pay loans back.

Stanford also owns a majority of the shares of Health Systems Solutions Inc. of New York City, which is traded on the OTC Bulletin Board. In October the firm agreed to acquire Emageon Inc. of Birmingham, Ala, but the deal was terminated Friday with Emageon attributing the development to Health Systems’ inability to obtain funding on or before the closing deadling of Feb. 11. Executives of Emageon couldn’t be reached for comment and Health Systems executives didn’t respond to requests for comment.

In mean time according to Bloomberg the company has Blamed ‘Former Disgruntled’ Workers in the Probe