PokerStars Founder Isai Scheinberg Pleads Guilty

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PokerStars creator Isai Scheinberg pleaded guilty this week to operating an illegal online gaming company in the U.S., as the Black Friday 2011 incidents eventually caught up with him.

The 74-year-old, who holds dual Canadian and Israeli citizenship, appeared before a court in New York on charges of a 2011 indictment alleging that Scheinberg was intentionally performing operations in violation of UIGEA, the Unlawful Internet Gambling Enforcement Act.

The manager of PokerStars was arrested in Switzerland in June last year and extradited to the US in January this year, following a failed appeal. The charges could lead to a maximum sentence of five years imprisonment, the Justice Department said yesterday in a press release.

Geoffrey S Berman, United States Attorney for New York’s Southern District, said: “Ten years ago, this office charged 11 defendants who operated, or provided fraudulent payment processing services to, three of the largest online poker companies then operating in the United States – PokerStars, Full Tilt Poker and Absolute Poker – with operating illegal gambling businesses and other crimes.

“As Isai Scheinberg’s guilty plea today shows, the passage of time will not undermine this office’s commitment to holding accountable individuals who violate US law.”

PokerStars was founded in 2001 and headquartered in the Isle of Man, offering online poker games to players around the world. Launched in October 2006, UIGEA made it a federal crime for gambling companies to “knowingly accept” certain forms of payment “in connection with another person’s participation in unlawful Internet gambling.”

Certain gaming operators acted by suspending US operations but PokerStars, Full Tilt and Absolute continued until 2011. The Department of Justice released a 52-page indictment of 11 executives at the three firms on April 15, 2011–a day that would become known as Black Friday–alongside a criminal suit against the firms.

In 2012, PokerStars decided to pay 547m dollars in forfeitures to the US government. Scheinberg’s son Mark decided to refund another $50 m he’d earned from PokerStars operations in 2013.

Isai Scheinberg acknowledged in pleading guilty that he was conscious that running a company that provided online poker to New Yorkers violated state law and federal law in the US. All 11 originally charged–including Scheinberg plus Raymond Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie, and John Campos–have now pleaded guilty, with 10 already convicted.

Isai Scheinberg can hear about his fate when he is convicted on a date yet to be decided by US District Judge Lewis A Kaplan.

 

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