Isai Scheinberg Pleads Guilty to “Black Friday”-Related Charge2 months ago
The US Attorney’s Office for the Southern District of New York has announced that PokerStars co-founder Isai Scheinberg has pled guilty to a single charge of operating an illegal gambling business in violation of US law. Scheinberg changed his initial not-guilty plea in a hearing held before US Magistrate Judge Sarah L. Cave, with Judge Cave accepting Scheinberg’s guilty plea.
Scheinberg becomes the last of 11 individual defendants initially charged in the “Black Friday” indictment of April 2011 to reach resolution with US authorities. The Israeli-Canadian national established PokerStars in 2002 along with his son, Mark Scheinberg, with the site becoming the world’s largest in 2007, a title it still holds today.
However, the senior Scheinberg and 10 other individuals were charged in the sweeping 2011 indictment that also forced the largest US-facing international poker sites to abandon the American market. Besides Stars, those sites included Full Tilt Poker, Absolute Poker, which also included UB.com (earlier known as UltimateBet). Officials of those other sites were also among those indicted, along with a handful of independent “third party” payment processors.
Manhattan U.S. Attorney Geoffrey S. Berman 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 U.S. law.”
The 73-year-old Scheinberg had been reported to be negotiating with US officials regarding the long-standing charges for several years. He surrendered to Swiss authorities on June 7, 2019, and then was extradited to the US on January 17, 2020. He was arraigned that same day, then immediately released on a million-dollar bail bond. He also surrendered his passport and was restricted to limited movement within the US, living temporarily in an upscale Manhattan hotel.
Scheinberg’s guilty plea could result in a sentence of up to five years in prison, though it is unlikely he will be sentenced to anything more than time served. A sentencing hearing has yet to be scheduled, and in the meantime, he will remain on an extended house arrest, effectively little more severe than the shelter-in-place order currently affecting millions of New York City residents.
Scheinberg also played a key role in negotiating a settlement with US authorities that resolved PokerStars’ federal liabilities to the US as claimed in another facet of the Black Friday case. The huge $547 million settlement covered much more than PokerStars’ own corporate fine. It also included funds for all the existing assets of then-rival site Full Tilt Poker, which had shuttered following the Black Friday crackdown PokerStars reopened Full Tilt (as Full Tilt Gaming) on an international basis much later while ensuring all international FTP balances were paid.
The huge 2012 settlement also created a vast fund for the repayment of Full Tilt’s US-based customers. That repayment (“remission”) program was later expanded to include former customers of the Absolute Poker sites, which also quickly failed after Black Friday.
The press statement issued by the SDNY Attorney’s Office noted some of these occurrences, though it interestingly also mentioned the $50 million settlement paid in March 2013 by Mark Scheinberg. The junior co-founder of PokerStars wasn’t charged on Black Friday, yet the settlement forestalled the possibility that he could have been added to the matter via an amended complaint. Mark Scheinberg’s non-prosecution settlement mirrored that reached with the US by one of PartyGaming’s co-founders, Anurag Dikshit, who agreed in 2010 to pay the US $300 million to resolve any liability connected to partypoker’s pre-UIGEA operations in the US.
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