Isai Scheinberg, the Founder of PokerStars, has been arrested by federal authorities after turning himself in last week.
Scheinberg Released on $1 Million Bail, Negotiating Deal
Isai Scheinberg, the founder of PokerStars has surrendered to federal authorities. The 73-year-old has been charged with various gambling and financial crimes over the years, including money laundering and bank fraud.
On January 17, Scheinberg pleaded not guilty in court on January 17th, and was released from police custody on $1 million bail. His travel will be restricted to only New York and Washington, D.C., as he has surrendered his passports to the authorities.
The Long Saga of Isai Scheinberg
Isai and his son Mark Scheinberg founded PokerStars in 2001. The pair originally operated the brand from Costa Rica and the Isle of Man, but a wrench was thrown into the works in 2006 when the UIGEA (Unlawful Internet Gambling Enforcement Act) was passed by American lawmakers.
Despite it being made illegal for PokerStars to operate in the United States, the Scheinbergs continued to run their site. By 2010, their brand was bringing in $1.4 billion in revenue. Most banks were reluctant to process online gambling payments, but some managed to get around legal scrutiny by obscuring transactions to do with online poker.
So, in April 2011, federal authorities personally shut PokerStars and other American-facing online poker sites down – a day famously known as “Black Friday” in the online gambling world. At that time, many professionals in the online poker world were charged with gambling-related crimes, former executives from Full Tilt Poker.
PokerStars then began operating outside of the United States, and paid the American government over $730 million to settle the lawsuit that has been filed against them. Scheinberg sold his take in PokerStars to Amaya Gaming in 2014 and has since evaded American authorities.
A few months ago, extradition proceedings were launched when Scheinberg visited Switzerland. At first, he contested it, but eventually decided to turn himself in.
What Happens Next?
Now that Scheinberg has been released on bail, he will have to face the charges that have been filed against him. Federal prosecutor Olga Zverovich stated that the US government and Scheinberg are quite far along in negotiating a deal.
The maximum penalty for violation of the UIGEA is five years in prison and a $250,000 fine – or twice the gross gain/loss for each charge. The maximum penalty for wire fraud is 30 years in prison and a $1 million prize, and 20 years for money laundering.
This is going to be an incredibly interesting case, as Scheinberg is the last of the gaming executives indicted on Black Friday to be arrested. The gaming industry will be watching closely to see what kind of deal Scheinberg strikes up.