Court Seals Challenge To NCUA Takeover Of Online Betting CU

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WASHINGTON – A federal court agreed yesterday to allow NCUA to submit records under seal bolstering its case for the April 15 conservatorship of Vensure FCU, an Arizona credit union that allegedly processed tens of millions of dollars in online poker bets.

In agreeing to seal the records from the public, U.S. Judge Rosemary Collyer conceded that NCUA’s argument supporting the takeover includes its confidential grounds for conservatorship as well as records of credit union accounts held by Trinity Global Commerce, which processed Internet bets for the two biggest online poker websites, PokerStars.com and FullTiltPoker.com.

NCUA’s takeover of the $4.7 million credit union came hours after the U.S. Department of Justice seized $2 million in the Trinity Global account along with dozens of other accounts at other institutions as part of a crackdown on Internet gambling that included indictments brought against some two dozen individuals around the globe.

But lawyers for the credit union maintain it was not engaged in any illegal activity in processing the ACH payments for Trinity, an estimated $25 million a day, and that NCUA knew all along of what it was doing. The credit union’s lawyers told the judge during a hearing last week on its request for a preliminary injunction to block the conservatorship they are concerned NCUA will go ahead and liquidate the credit union, even before the court has a chance to rule in the case.

Vensure, chartered in 1952 as New York’s Grand Adirondack FCU, then moved to Florida in 2009, before setting up shop in Mesa, Ariz., insisted in court filings it will continue to be a viable business even if the Justice Department seeks forfeiture of the Trinity funds, its biggest of just 144 accounts.

In fact, the credit union, which earned almost $600,000 for 2010, reported another net of $314,000 for its first quarter – an annualized return-on-assets of 2.7% – and net worth of $1.2 million, or 26%. The first quarter report shows the credit union has no loans and has not made a loan in more than two years.

Judge Collyer has scheduled a show cause hearing for May 11, where NCUA will be required to show the validity of its takeover.

NCUA has never lost a court challenge to one of its conservatorships.

 

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