A small Utah bank tied to a Las Vegas fraud lawsuit and April’s Internet poker crackdown failed on Friday.
SunFirst Bank in St. George, Utah, was closed by the Utah Department of Financial Institutions, which appointed the Federal Deposit Insurance Corp. as receiver.
The FDIC said it arranged for Cache Valley Bank, Logan, Utah, to assume most of the deposits of SunFirst Bank.
In the April 15 indictment in Manhattan of the principals of PokerStars, Full Tilt Poker and Absolute Poker, prosecutors also gained an indictment against SunFirst Vice Chairman John Campos on charges he arranged for the bank to illegally process Internet poker transactions.
The indictment said he was induced into doing so by another defendant in the poker case, Las Vegas businessman Chad Elie.
SunFirst had earlier gained notoriety when the FDIC demanded that it stop processing funds for St. George businessman Jeremy Johnson, who along with several of his companies and associates had been sued in Las Vegas by the Federal Trade Commission.
The FTC charged in the Las Vegas lawsuit that Johnson and his companies including I Works and Elite Debit had scammed consumers to the tune of $289 million by luring them into "trial memberships for bogus government-grant and money-making schemes, and then repeatedly charging them monthly fees for these and other memberships that they never signed up for.''
After the FTC lawsuit, Johnson was hit with criminal charges in the alleged scam.
Johnson, known as a high roller at Las Vegas casinos and a big Internet poker customer, has denied wrongdoing.
While Johnson was not named in the poker indictments, he and Elie had done business together and records show Johnson arranged for Elie to do business with SunFirst.
The legal problems at SunFirst, which had lost $2.7 million through the first half of the year, appeared to contribute to its downfall, the FDIC suggested in a statement today.
“The FDIC will retain approximately $15 million in deposits that may be subject to external litigation involving SunFirst Bank. The affected accounts were frozen prior to the failure of the bank,” the FDIC said.
As of Sept. 30, SunFirst Bank had some $198.1 million in loans and other assets and $169.1 million in deposits.