A Spanish judge investigating alleged irregularities in Caja Madrid's acquisition of City National Bank of Florida in 2008 on Wednesday ordered the Spanish financial institution's former executive chairman, Miguel Blesa, sent back to jail.

Judge Elpidio Jose Silva issued his ruling at the request of the Manos Limpias (Clean Hands) public employees' union, which has filed several corruption lawsuits, after hearing testimony from Blesa.

The erstwhile Caja Madrid executive had been jailed on May 16 but he was released less than a day later after posting bail of 2.5 million euros ($3.27 million).

On Wednesday, Silva also heard testimony from another suspect in the case, Caja Madrid's former chief financial officer, Ildefonso Sanchez Barcoj.

The questioning of the two suspects has centered on e-mails they exchanged prior to the purchase of the U.S. bank.

Caja Madrid had signed a forward exchange contract - at a time when the dollar traded at $1.60 per euro - to lock in the amounts it planned to spend to acquire CNB and Mexican mortgage lender Hipotecaria Su Casita, as well as an additional forward contract in the amount of 100 million euros.

Silva has found that those e-mails reveal an "imbalance" in the the regional lender's accounts, while sources with Blesa's defense team argued that the 100 million euros was merely a cash position and that the exchange rate hedge resulted in a net gain for Caja Madrid.

The judge also decided to send Blesa back to jail on the grounds that the purchase of CNB was "split up" into separate transactions to elude regulatory oversight.

Blesa's defense team, however, said the Florida bank was 100 percent owned by its chairman, Leonard Abess, and that, as part of the transition process, Caja Madrid initially purchased 83 percent of the bank so that Abess could continue to run CNB for approximately a year and a half.

Once that time had expired, Caja Madrid acquired the remaining 17 percent in the bank.

Caja Madrid was one of seven troubled regional savings banks that merged to form the Bankia group, which was nationalized by the Spanish government last year due to heavy losses.

Bankia's problems touched off a crisis that eventually prompted a roughly 40-billion-euro ($52-billion) European bailout of Spain's financial system. EFE