Financier for HSS-Emageon deal charged with fraud
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Stanford International was poised to finance HHS' merger with Emageon, a developer of enterprise medical IT systems for hospitals and healthcare networks, in October 2008.
Federal investment fraud charges have been brought against the Stanford Group and Stanford Capital Management, two Houston-based financial advisory firms, as well as Stanford International Bank, an Antigua-based company.
The New York City-based HSS was to acquire the Birmingham, Ala.-based Emageon for $62 million, however the deal was delayed when officials had trouble getting financing from Stanford International in time for a Dec. 18 closing date. The deal was extended to Feb. 11, at which time HSS was to deliver $4 million to a $5 million escrow account for Emageon if the deal fell through.
On Feb. 11, it was revealed that HSS officials did not have the funding from Stanford International to finalize the deal. Emageon called off the deal and took control of the escrow account the following day.
The Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) shut down Texas billionaire R. Allen Stanford's three businesses on Feb. 17 over charges of investment fraud. On Feb. 18, FBI agents tracked the billionaire to the home of an acquaintance in Fredericksburg, Va., and served him with the SEC civil lawsuit , reported the Wall Street Journal (WSJ).
The SEC has accused Stanford of duping investors into buying certificates of deposits with promises of high returns; instead he poured the money into hard-to-trade assets, including real estate and private equity.
Although the SEC complaint did not call Stanford's actions a Ponzi scheme--which refers to a ruse in which money from new investors is used to pay off older investors--the WSJ reported that authorities now believe Stanford may have been operating such a scheme.
At this time, no criminal charges have been filed against Stanford, so he remains free.