PokerStars founder Isai Scheinberg has avoided lengthy prison time after being issued a mere $30,000 fine and sentenced to ‘time served’ following his initial indictment on what was dubbed “Black Friday” back in 2011.
The news was originally reported by the Inner City Press. In what some might term the ultimate plea bargain, Scheinberg had his charges of bank fraud and money laundering dismissed as part of an arrangement after originally facing a prison sentence of between 12 to 18 months.
He was first arrested in Switzerland in June 2019 and then extradited to the US in January 2020 following a failed appeal. Scheinberg appeared before a New York court later in March on charges from an indictment filed originally in 2011 that alleged he knowingly ran operations in contravention of ‘The Unlawful Internet Gambling Act of 2006’ or UIGEA.
Beginning in April 2011, New York federal prosecutors brought charges against Scheinberg and other leading online poker executives whose operations in the US were found to directly transgress and be in illegal contempt of UIGEA. The indicted parties faced much longer prison sentences, while a separate civil complaint filed against the named companies sought $3B in assets from their websites.
The main intent of UIGEA was to prohibit gambling companies from processing restricted transactions, which included payments relating to online wagers. The bill’s passage saw PartyPoker, 888, and several other major international poker sites leave the US market almost immediately. Other named companies including PokerStars, Full Tilt Poker, and Absolute Poker continued to operate in the states.
In likely settling and ending this case, Scheinberg is the last of the eleven defendants to answer to his Black Friday related charge. The initial sentences were dealt to independent third-party payment processors, including John Campos, Chad Elie, Bradley Franzen, and Ira Rubin. After this stage, at least two executives each from PokerStars, Full Tilt Poker, and Absolute Poker were also charged.
Like interpreting how a poker hand was played and won, several opinions vary, and any could be correct. In ruling the case, the judge made note that “Scheinberg made whole of the other victims’ platforms”.
Translated that could mean he took the fall for some of the other people involved. Or his “good works” included PokerStars takeover of Full Tilt Poker following its collapse after Black Friday. A large and expensive component was taking on Full Tilt Poker’s debts including almost $200M in non-US player balances.
PokerStars also paid $547M to the US Department of Justice in settling a civil forfeiture plus a civil money laundering action. In terms of this settlement, Scheinberg was prohibited from serving any managerial or directorial role at the company. His executive roles were then turned over to his Mark Scheinberg.
In commenting, Isai Scheinberg seemed grateful and obviously relieved.
I am pleased that Judge Kaplan has determined today not to impose a prison sentence in my case. I am particularly proud that in 2011 when PokerStars exited the United States, all its American players were made whole immediately. Indeed, PokerStars reimbursed millions of players who were owed funds from other online companies that could not or did not repay those players.
Today PokerStars is part of The Stars Group, formerly known as The Amaya Gaming Group & Rational Group, now merging with Flutter Entertainment, one of the world’s largest gaming companies.
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Larry Gibbs is both a seasoned journalist and a respected online gaming industry consultant. His wry commentary & sharp analysis have appeared in numerous top gaming and sports wagering publications. He has also served as Vice President of US Gaming Services, a marketing research organization with 15 years of experience in US online wagering. He has spoken at noted gaming industry conferences including G2E, GiGSE, and NCLGS.
Email: [email protected]
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