Judge: All Bets Off For Gambling-Backed CU After Federal Indictments

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WASHINGTON – A federal judge yesterday said NCUA’s closure of Vensure FCU on Monday was predicted by the April 15 regulatory takeover, hours after federal indictments against international gambling figures and the freezing of their assets cut off all sources of income for the Mesa, Ariz. credit union.

In an explanation of a June 24 sealed order, U.S. Judge Rosemary Collyer ruled that NCUA’s conservatorship was not “arbitrary and capricious” as lawyers for the $5 million credit union had argued, but were well-founded based on the elimination of the credit union’s sole source of business processing bets for the world’s two biggest Internet poker sites, PokerStars and Full Tilt Poker. The bets – as much as $25 million per day – were funded and processed through an account of the credit union’s biggest depositor, Canada’s Trinity Capital, which had a $2 million account frozen as part of the indictments.

“This was an emergency of such proportions and impact on Vensure that the agency would have acted on these grounds alone,” wrote Judge Collyer in her decision.

“Considering the facts that were understood on April 15, the date of the imposition of the conservatorship, such a decision was thoughtful, well-reasoned, and within the said discretion of NCUA,” ruled the judge. “The [indictments], coupled with Vensure’s failure to diversify, placed Vensure at terrible risk.”

Lawyers for Vensure, a one-time New York City-based credit union chartered in 1955 as Grand Adirondack FCU that bounced around to Florida in 2008, then Arizona the following year, argued that even without the gambling business it was preparing a comprehensive loan and deposit program prior to the NCUA takeover.

In rejecting that argument Judge Collyer wrote, “The agency predictably took action not only to protect Vensure and its customers, but also the National Credit Union Share Insurance Fund that would have funded any potential run.”


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