Federal Regulators have ordered SunFirst Bank to raise additional capital or find a buyer for the struggling bank, which was caught up in the April 15 crackdown on Internet poker companies.
The order, issued July 28 but made public Friday by Federal Deposit Insurance Corp. officials, gives the bank 30 days to comply. Known as a "prompt corrective action," the order is the last public action regulators take before deciding the fate of the bank.
The bank, based in St. George, Utah, was also fined $2,300 Friday by the FDIC for violations of the Flood Disaster Protection Act of 1973.
"The bank failed to obtain and maintain adequate insurance for the term of the designed loans secure by property located in a special flood hazard area," FDIC officials said in a civil penalty order.
SunFirst gained notoriety earlier this year as part of a federal crackdown on Internet poker that led to the April 15 indictment of senior executives with PokerStars, FullTilt Poker and Absolute Poker.
Among those indicted were SunFirst Vice Chairman John Campos, whom authorities accused of arranging illegally for the bank to process Internet poker transactions.
Campos is alleged to have made a deal with a processor for two of the three online poker companies to use the bank to accept payment from poker players for a $10 million investment in SunFirst and a $200,000 personal bonus for his consulting services.
The Unlawful Internet Gaming Enforcement Act of 2006 makes it a federal crime to knowingly accept most forms of payment for illegal Internet gambling. Federal prosecutors alleged Campos was induced into participating by Las Vegas businessman Chad Elie, also a defendant.
SunFirst processed more than $200 million in payments for PokerStars and FullTilt Poker through Nov. 9, 2010, earning about $1.9 million in fees, according to the indictment filed by the U.S. Attorney's Office in Manhattan.
For the first six months of 2011, SunFirst lost $2.7 million on interest income of $3.8 million. At the end of the second quarter, the bank reported capital of about $17 million, along with $212.7 million in loans and other assets and $179.5 million in deposits.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893.