WASHINGTON – A federal judge gave Vensure FCU and NCUA two weeks to file their arguments over the April 15 seizure of the tiny credit union embroiled in an international gambling scandal, but by then it may be too late as the credit union is hurtling toward insolvency.
In three weeks since the NCUA takeover the $4.7 million credit union has spent most of its $1.7 million in capital – 33% – and is rapidly spending the remaining $213,000 on operating expenses, NCUA told U.S. Judge Rosemary Collyer Wednesday during a show cause hearing on the April conservatorship.
Operating expenses include $50,000 a month to rent a three-suite office in Mesa, Ariz., $40,000 a month in salaries for five employees and $20,000 a month in data processing costs.
NCUA Regional Director Elizabeth Whitehead told the judge the agency also expects the U.S. Justice Department to seize funds the credit union earned processing some $10 million a day in online bets for the two biggest poker websites, PokerStars.com and FullTiltPoker.com, wiping out any capital that may survive the next few weeks. “It’s going to be insolvent in a couple of weeks,” she told the judge.
NCUA seized Vensure hours after the Justice Department charged 11 international gambling figures and froze $3 billion in dozens of their accounts, including $2 million in Vensure. The account belonged to Trinity Global Commerce, a Canadian company that was processing poker bets for the two websites. Processing fees on the funds, projected at $4 million this year, are the credit union’s only source of income, as it has no loans, according to NCUA.
“When they [the Justice Department] seized the assets, that was when we realized it was all over for the credit union,” NCUA’s Whitehead told the judge.
Judge Collyer has given Vensure’s lawyers one week to summarize its challenge to the NCUA conservatorship and given NCUA a week after that to respond.
By then it may be too late.
