NextCard Bank Shut Down
Federal regulators have shut down the Internet bank of San Francisco-based NextCard Inc.,a once high-flying financial company whose downfall has snared Orange County’s Safi Qureshey in several lawsuits.
The office of the Comptroller of the Currency ordered the bank to shut down last month because it was operating in an “unsafe and unsound” manner, according to the agency.
The comptroller also said the bank has seen a “substantial dissipation of assets and earnings through unsafe and unsound practices.”
NextCard was an issuer of credit cards via the Internet. In less than four years, NextCard became the largest online issuer of credit cards with more than a million card holders and portfolios of more than $2 billion.
NextCard was funded by Qureshey, a co-founder of former Irvine computer maker AST Research Inc. and who now runs venture capital firm Irvine Ventures.
Qureshey sits on NextCards’s board and has been mentioned in some shareholder lawsuits against the company.
At least 15 lawsuits have been filed against NextCard. Investors and their lawyers accuse NextCard management of improper accounting practices and withholding information.
Regulators not only shut down the NextCard bank, they seized the assets with the Federal Deposit Insurance Corp. named as the receiver.
David Barr, an FDIC spokesperson, said that the agency now is selling the $2 billion credit-card portfolio to another company.
The agency already has started mailing checks to depositors who were insured, Barr said.
,Rajiv Vyas
