Gambling-Backed CU Almost Insolvent After NCUA Takeover
WASHINGTON — The tiny Arizona credit union taken over by NCUA last month amid international gambling indictments has almost dissipated all of its assets and is one the verge of insolvency since then, NCUA officials told a federal judge this afternoon.
"It's going to be insolvent in a couple of weeks," Elizabeth Whitehead, NCUA's Region Five Director, told U.S. Judge Rosemary Collyer, who is hearing an appeal by Vensure FCU of the April 15 NCUA conservatorship.
Since the NCUA takeover, Mesa, Ariz.-based Vensure, which is financed by ACH processing of online poker bets, has burned through most of its 33% net worth, while one member, a director, has withdrawn$600,00, or one-fourth of its deposits, according to Whitehead. The credit union is no longer a going concern without its gambling business, the credit union regulator asserted.
NCUA took over the $4.7 million credit union hours after the U.S. Justice Department charged 11 international gambling figures with violating federal gambling statutes and froze $3 billion of their accounts in three dozen institutios — including a #$2 million account at Vensure. That account was processing some $10 million of bets a day for the two biggest poker websites, PokerStars.com and FullTiltPoker.com.
NCUA said the combination of high operating expenses and the likelihood the Justice Department will seek forfeiture of all fees and assets earned from internet gambling have rendered the credit union insolvent.
The Judge is expected to issue a ruling in the next few days.