The NCUA and Vensure FCU continue to slug it out in court.

The NCUA contends Vensure had a long, questionable history.

Vensure counter charged that NCUA conserved it out of embarrassment.

As of this writing, U.S. District Judge Rosemary Collyer isscheduled to hear oral arguments and perhaps deliver a decision inVensure Federal Credit Union's attempt to stave off NCUA's conservatorship of itsoperations.

But no matter how the decision comes down, the agency and thecredit union have already traded significant blows through theirredacted legal filings in the case.

The NCUA conserved the $4.7 million credit union on April 15,just hours after its largest account holder had its account seizedas part of a federal investigation into allegedly unlawful Internetgambling transactions. The CU has been fighting the order eversince.

In its filings leading up to a May 11 deadline, the NCUAsuggested that it had known something was up about the institution,which the NCUA characterized as being a “sleepy little creditunion” as early as 2008 when an organization calling itself theNational Investors Financial Education Association applied for CUservices through the Grand Adirondack Federal Credit Union(Vensure's name at the time).

NCUA's filings said the agency had “concerns” about the request,but that after they were answered, it allowed members of theorganization's Manhattan chapter, located in New York City, to joinGAFCU.

Prior to this addition, the NCUA characterized the CU as“self-liquidating,” with assets dropping from $73,529 in December1999 to $30,966 in December 2007.

But after the addition of NIFEA in April 2008, a delayedexamination of the CU's books in November of that year found thatthe CU's assets had grown by more than ten times, to more than$349,000.

It was soon after, in early 2009, that theNCUA said it was surprised by the credit union's “sudden” move fromNew York to Arizona.

“NCUA was completely unaware of any intended move by GAFCU andcaught off guard by the news because not only did GAFCU fail toconvey its intention before it moved, it also elected not to notifyNCUA first after it moved,” the agency said in its filing.

Then, according to the NCUA, an almost comic search ensuedaround the country for the true location of the CU that involvedthe NCUA staffers phoning or visiting locations in New York,Florida and Texas before they finally found GAFCU, nowheadquartered in the small Arizona town of Gilbert.

Only by this time, the CU's assets had increased to $2.1million, its balance sheet swelled, according to someone whose namewas redacted from the filing, by fee and “other operating income”from two CUSOs: Account Process Systems and Verartis Inc., whichoffered financial transaction and financial counselingservices.

But by the time GAFCU applied for and received permission tochange its name to Vensure FCU, the NCUA said it had learned thatthe income had not come from transaction processing or financialcounseling but from the “legally suspect source” of Internetgambling transaction processing.

The agency was immediately concerned and said it began pressingVensure to stop the processing and sever its relationship withTrinity Global Commerce Corp., the third-party transaction providerfor two of the largest online poker sites, PokerStars and Full TiltPoker.

The actual figures illustrating how great a percentage ofVensure's income Trinity transactions represented were redactedfrom the court documents, but the agency argued “according to allthe information available prior to April 15, 2011, Vensure appearedto be nothing more than a shell whose only function was tofacilitate Trinity's processing of Internet gamblingtransactions.”

For its part, in its replies, Vensure reiterated its previouscontentions that it had complied with the NCUA's demands to ceaseprocessing for Trinity and that the agency had been satisfied withthe CU not renewing the contract and only processing for Trinity inthe interim. The NCUA had only conserved the CU, Vensure argued,because its leadership was concerned about being embarrassed by theU.S. Attorney's actions.

As proof, Vensure pointed to part of a debate among NCUA boardmembers from the meeting where the agency decided to conserve theinstitution. The debate had been included in the administrativerecord that the agency submitted sealed to the court, but Vensure'scitation of the debate was not redacted.

“The actual ground for this decision, which was not set down inNCUA's statement of grounds [for the conservatorship], wasreflected in NCUA Board Member Michael Fryzel's statement on theday of the conservatorship,” the credit union argued, quotingFryzel as saying, “We are going to have to be taking action on at[sic] the last minute in order to make sure that we are notembarrassed further.”

Vensure quoted NCUA Chairman Debbie Matz who responded, “I echoyour comments.” Fryzel said, “Now, at this late date, we sit hereattempting to take action before the Justice Department moves inand embarrasses us even further.”