Court Won’t Lift NCUA Hold Over Gambling-Backed CU

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WASHINGTON – A federal court last week rejected a bid by Vensure FCU to get NCUA to lift its 10-week long conservatorship as law enforcement agents expand their investigation into the credit union’s role in illegal online gambling.

Investigators with the U.S. Justice Department are probing the role of the biggest depositor in Vensure in an international gambling ring. The depositor, Trinity Global Commerce, is a Canadian company that processes bets for the two biggest online poker sites, PokerStars and Full Tilt Poker. Authorities say Trinity’s $2 million deposit with the credit union, located in a three-room office in a strip mall in Mesa, Ariz., facilitated the processing of billions of dollars in online bets.

NCUA took over the $4.7 million credit union on April 15, just hours after the Justice Department announced indictments against 13 Internet gambling figures and froze $3 billion in three dozen of their bank accounts, including Trinity’s Vensure account. The figures were charged with violating the Unlawful Internet Gambling Enforcement Act.

The court’s action, sealed to the public, comes as one figure in the case pleaded guilty to arranging dozens of U.S. banks to process the Internet bets under phony company invoices. According to the U.S. Attorney in New York, Bradley Franzen ran a Costa Rica company that brokered processing deals with smaller banks and credit unions.

Franzen pleaded guilty to charges he violated the UIGEA by knowingly processing bets for illegal gambling. The 2006 law makes it a crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.”

Meantime, NCUA has been using Trinity’s frozen funds, which are diminishing, to pay operating expenses for Vensure. NCUA said earlier without the gambling business the credit union would be insolvent as it has just a single loan. NCUA is expected to move to liquidate Vensure as soon as the judge gives her approval.

NCUA declined to comment on the case, as did the Justice Department.

 

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