The founder and former executive of PokerStars, Isai Scheinberg, has pled guilty before U.S. Magistrate Judge Sarah L. Cave to running a multimillion-dollar unlawful internet gambling business and is now facing a maximum sentence of up to 5 years in prison.
The Poker Companies Crackdown
The charges relate to the crackdown against online gambling websites that continued to target US-based clients after the Unlawful Internet Gaming Enforcement Act /UIGEA/ was passed in 2006, when most operators decided to leave the market, but PokerStars, Full Tilt Poker, Absolute Poker and Ultimatebet remained operative, until the Department of Justice /DOJ/ took action against them and shut their sites down in April 2011. Absolute Poker and Ultimatebet were 2 different skins of the same operator, Cereus.
Isai Scheinberg is the last of the individuals that will have to face charges related to the unlawful gaming operations in a case in which 11 defendants in total were charged in the original indictments – 2 from PokerStars, CEO Scheinberg and Payments Director Paul Tate, 2 from Full Till, CEO Raymond Bitar and Director of Payments Processing Nelson Burtnick, and 2 from Cereus, Absolute Poker founders Scott Tom and Brent Beckley.
Payments Processed Illegaly
In addition to the top managers of the online poker companies, 5 other people were charged – these were the payment processors Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie, and John Campos, who helped the poker companies hide the true nature of their financial transactions in front of the US banks, as the latter were refusing to process deposits and withdrawals for gambling online businesses by that time.
Up until now all but Scheinberg, who surrendered to federal authorities earlier this year, had pled guilty and had been sentenced ranging from fines to jail time, and now as Scheinberg admitted to one count of operating an illegal gambling business, Judge Lewis Kaplan will determine his punishment on a date that is yet to be set. All other charges were dropped.
Scheinberg Relieved To Leave All Behind
The former CEO of PokerStars, a dual Canadian and Israeli national, was at large until June 2019, when he was arrested in Switzerland based on the US charges, and four months later, in October, ordered to be extradited by the Swiss Federal Office of Justice, a decision he initially appealed but later on withdrew the appeal and surrendered to US federal agents.
“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.”Geoffrey Berman, US Attorney for the Southern District of New York
Besides the charges to its founder, PokerStars agreed to settle a civil forfeiture and civil money laundering action to the amount of $547 million to the US authorities and reimburse $184 million to Full Tilt players and acquire its assets, as the latter collapsed in the wake of the indictments.
Update: GamblingNews.com was contacted by a representative on behalf of Mr. Scheinberg who had this to add: “Mr. Scheinberg is pleased to put this matter behind him and that all charges other than violating the 1971 Gambling Act have been dropped. Notably, all PokerStars players were paid back immediately and Mr. Scheinberg played an important role in ensuring that all of the players from other sites were repaid as well.”