NEW YORK – An obscure credit union shuttered by NCUA a few months ago played a key role in moving tens of millions of dollars for what authorities say was an elaborate “Ponzi scheme” operated by the world’s biggest online poker betting operations.
The U.S. Justice Department charged the owners of Full Tilt Poker yesterday with defrauding millions of online poker players out of more than $300 million, facilitated through dozens of banks around the world, including Vensure FCU, a tiny credit union shut down by NCUA July 11.
In new charges filed in federal court yesterday, the U.S. Attorney for the Southern District of New York accused the owners of Full Tilt Poker of running a massive Ponzi scheme that allowed the company to pay out $444 million to themselves and other owners, which included famous poker players. Full Tilt Poker and several other online gambling sites were shut down by the Justice Department in April, when $3 billion in accounts at 34 banks and Vensure were seized. The seizure prompted NCUA to take the one-time $1 million credit union, located in Mesa, Ariz., under conservatorship.
An ensuing court battle showed the credit union was little more than a pass-thru that processed hundreds of millions of dollars in online poker bets for Full Tilt Poker and Poker Stars, another of the international gambling operations shut down by the Feds. Court records show the poker operations, which were supposed to be banned in the U.S. under the Unlawful Internet Gambling Enforcement Act, scouted out small, troubled financial institutions to process the poker bets through access to the Federal Reserve’s payments system using phony originations, such as flower shops or office supplies.
The Justice Department has long held that online poker is illegal under several federal laws, while the poker web sites such as Full Tilt that operated in the U.S. argued that poker is not illegal in part because it is a game that involves skill and not purely chance.
A legal challenge to the NCUA takeover of Vensure showed that $2 million on deposit at the credit union belonged to Trinity Global Corp., which processed bets for Full Tilt Poker and Poker Stars, while the credit union had just one loan outstanding. The tiny credit union was processing tens of millions in bets daily, according to court documents. Virtually all of the credit union’s income was earned from processing poker bets.
According to the latest filing from the Justice Department, Full Tilt Poker had just $60 million in its accounts just before the April crackdown occurred, while it owed $390 million to players around the world. Yet the company had been distributing around $10 million a month to its owners, the government alleges. Those payments stopped in April, when the accounts at Vensure and the banks were seized.
Like the other banks chosen to process the questionable poker bets, Vensure, known until 2010 as Grand Adirondack FCU, was chosen targeted because it was foundering, with less than $800,000 in assets as it moved from New York City to Florida, then to Arizona.
