NCUA to file May 4 on Vensure

April 28, 2011

NCUA to file May 4 on Vensure

April 29, 2011 – NCUA is due to file its response by May 4 to an order to show cause for its conservatorship of Vensure FCU, a small credit union in Mesa, Ariz., that had provided automated clearinghouse services to a firm providing the same to two online poker sites.

Vensure filed a suit challenging the agency's action earlier this week and lost its bid for a preliminary injunction. Courts rarely if ever turn back federal financial institution regulators' conservatorship or receivership orders. A show-cause hearing is slated for 2 p.m. May 11 in the U.S. District Court for the District of Columbia.

NCUA placed the credit union in conservatorship April 15. The agency didn't describe the reasons for the conservatorship, but as of Dec. 31 the institution's call report showed it with $2.7 million in assets, no loans outstanding and a capital ratio of more than 33 percent. Of the $1.7 million in deposits at that time, about 40 percent were uninsured. The credit union nearly doubled its assets in the following quarter, as NCUA reports it had $4.7 million as of March 31 and 144 members.

Vensure FCU, in its April 26 complaint and request for injunction, describes an arrangement it had with a "member client," Trinity Global Corp., to provide ACH services. The credit union said it generated most of its revenue through this arrangement over the past two years. It also says NCUA was fully aware of the arrangement and that, when the agency asked it to cease processing poker payments, it did.

Trinity Global processes payments for two of the world's largest poker sites, PokerStars and Full Tilt Poker. The 11 principals in these two companies and a third, Absolute Poker, are the subjects of a federal indictment alleging bank fraud, money laundering and illegal gambling. The indictment was unsealed April 15 and announced by a U.S. attorney's office and FBI field office in New York.

Trinity's account at the credit union was frozen because it held funds by one of the named principals, according to Vensure, which argues it can maintain operations without access to those funds.

The credit union's suit is before federal Judge Rosemary Collyer.

Vensure is one of several institutions that reportedly had affected accounts. The firms allegedly tricked some institutions into involvement and bribed others. "More than 75 company bank accounts in 14 countries have been frozen, and authorities are seeking $3billion in fines and restitution," The Washington Post reported April 21. Firms reportedly are repaying funds to some customers.

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