PokerStars Founder Isai Scheinberg, Last of the ‘Black Friday’ 11, Pleads Guilty to Running Illegal Online Gambling Site
Posted on: March 25, 2020, 09:40h.
Last updated on: March 26, 2020, 10:23h.
UPDATE (11:45 am ET): A spokesperson for PokerStars founder Isai Scheinberg issued the following statement Thursday to Casino.org:
“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.”
Two months after returning to federal custody, Isai Scheinberg, the founder of PokerStars, pled guilty in a New York federal court Wednesday to running an illegal online poker site.
The 73-year-old now faces up to five years in prison. According to a release from the US Attorney in New York’s Southern District, Judge Lewis A. Kaplan’s sentencing of Scheinberg has yet to be scheduled. He was the final defendant to plead guilty in a case where the other defendants also admitted guilt.
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,” US Attorney Geoffrey Berman said in a statement. “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.”
According to the US Attorney’s statement, by pleading guilty Scheinberg confessed that he knew operating an online poker site in the US violated both New York and federal law. Despite that, he continued to offer the online product for years.
Of his fellow defendants who received prison sentences, none were given more than three years behind bars.
On April 15, 2011, a date known in the poker world as “Black Friday,” the federal government seized the assets and domains of PokerStars, Full Tilt Poker, and Cereus. Prosecutors charged Scheinberg, an Israeli-Canadian businessman, with bank fraud, money laundering, and violating the Unlawful Internet Gambling Enforcement Act.
While he remained on the lam, the company eventually settled with the US Department of Justice on the civil charges related to the case. PokerStars paid $731 million in 2012 to retain its assets and those belonging to Full Tilt Poker.
Full Tilt was an online competitor of PokerStars that went tilt. As part of the “Black Friday” charges, Full Tilt owed its players nearly $400 million, yet only had $60 million available. PokerStars’ deal allowed Full Tilt’s patrons to be repaid.
Scheinberg was arrested in Switzerland on June 7, 2019. A Swiss court ordered his extradition to the US in October. After initially appealing the decision, he agreed to it and surrendered to US agents on Jan. 17.
He was subsequently released on a $1 million bond and turned over his passport to authorities. He’s been limited to travel within the Southern and Eastern Districts of New York, as well as Washington, DC to meet with his attorneys.
Stars Now Seeking Mega-Merger
Scheinberg and his son Mark sold PokerStars to Amaya Inc. for $4.9 billion in June 2014. The company, now known as The Stars Group, is a publicly traded company based in Toronto.
That allowed the company to return to operate in the US. In March 2016, it launched online poker in New Jersey and has since expanded into Pennsylvania. Since then, The Stars Group has also expanded into sports betting, most notably with its partnership with Fox Sports.
Last October, The Stars Group and Flutter Entertainment, which owns Betfair and FanDuel, announced a $12.2 billion merger that would create an online gaming goliath. That deal has yet to close pending regulatory approvals.
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