ST. GEORGE — SunFirst Bank, whose vice chairman and co-owner has been indicted in an alleged Internet gambling and money laundering scheme, was closed Friday by state regulators but will continue to be federally insured and operate as Cache Valley Bank.
Depositors of SunFirst Bank will automatically become depositors of Cache Valley Bank and deposits will remain insured by the Federal Deposit Insurance Corp., which has entered into a purchase and assumption agreement with Cache Valley Bank.
All three branches of SunFirst Bank will reopen as Cache Valley Bank during regular business hours on Saturday.
On Friday evening and over the weekend, depositors of SunFirst Bank whose accounts were assumed by Cache Valley Bank can access their money by writing checks or using ATM or debit cards, according to the FDIC. Checks drawn on those accounts will continue to be processed. Loan customers should continue to make their payments as usual.
The FDIC said customers of SunFirst Bank should continue to use their existing branch until they receive notice from Cache Valley Bank that it has completed systems changes to allow other Cache Valley Bank branches to process their accounts as well.
The failure of SunFirst comes nearly seven months after John Campos, 57, was among 11 men federal prosecutors indicted for their alleged participation in a conspiracy involving the three largest Internet poker companies doing business in the United States. Campos is co-owner and vice chairman of the bank.
The indictment says Campos initially had "trepidations," but then agreed to process gambling transactions in return for a $10 million investment in SunFirst by a Las Vegas man named Chad Elie and an associate. The investment would have given Elie and his associate 30 percent ownership in the bank, according to the indictment.
SunFirst is also connected with Jeremy Johnson, a St. George businessman who is accused by prosecutors of running a $350 million fraud scheme that ripped online consumers through his company, iWorks. Many of Johnson's business deals went through SunFirst. According to the FTC, Johnson introduced the bank to the online gambling processing, while Elie handled the technological side of the deal.
Johnson has pleaded not guilty to one count of mail fraud.
As of Sept. 30, 2011, SunFirst Bank had approximately $198.1 million in total assets and $169.1 million in total deposits. In addition to assuming deposits of the failed bank, Cache Valley Bank agreed to purchase approximately $177.3 million of the failed bank’s assets. The FDIC will retain the balance of the assets for later disposition.
The FDIC and Cache Valley Bank entered into a loss-share transaction on $128.9 million of SunFirst Bank's assets. Cache Valley Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov.
Customers with questions about Friday's transaction should call the FDIC toll-free at 1-800-895-0643. The phone number will be operational on Saturday from 9 a.m. to 6 p.m. MDT; on Sunday from noon to 6 p.m., MST; on Monday from 8 a.m. to 8 p.m. and thereafter from 9 a.m. to 5 p.m. Interested parties also can visit the FDIC's website at http://www.fdic.gov.
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