WASHINGTON – A federal judge denied a request today from Vensure FCU for a temporary restraining order blocking NCUA’s April 15 conservatorship of the $4.7 million credit union linked to the ongoing scandal over online poker betting.
In issuing her order, U.S. Judge Rosemary Collyer cited federal law giving NCUA extraordinary powers to take over and liquidate federally insured credit unions. NCUA has never lost a court challenge to its conservatorship powers.
In a brief hearing Monday, lawyer for the Mesa, Ariz.-based credit union argued the NCUA takeover threatens the existence of the credit union and of its chief corporate sponsor, Vensure Employment Services, which is linked closely to the credit union.
NCUA took the credit union over hours after federal prosecutors handed down indictments charging more than two dozen individuals linked to online poker betting with violating U.S. laws and seizing bank accounts held by the charged individuals. That included a $2 million account at Vensure FCU that processed $25 million a day in automated clearinghouse transactions for the two biggest online poker websites, PokerStars.com and Full Tilt Poker.
Vensure lawyers told the judge the credit union has made moves to terminate its relationship with the poker sites and is capable of surviving without those revenues, which made up the vast majority of its business last year. They told the judge they are worried that NCUA, which put the Vensure CEO and its four full-time employees on leave with pay after the takeover, is moving rapidly to liquidate the credit union.
Major portions of the court filings are blacked out, including the details of NCUA's confidential order of conservatorship and information in the federal gambling indictment.
The credit union has an unusual history. It was chartered in 1955 as Grand Adirondack FCU, then moved briefly to Florida in 2009, before settling in Arizona and agreeing to process the online gambling bets. Court documents show that NCUA knew all along of its core business and directed the credit union in January to cease and desist its gambling ties, which the credit union board voted to do later that month. At that point it notified the online poker sites of its intention to terminate its processing agreement within 180 days.
