Legal & compliance

Isai Scheinberg escapes with fine for illegal gambling

3 minutes read
Isai Scheinberg, the founder of PokerStars, has been fined $30,000 for his role in running an illegal internet gaming business in the US, but avoided jail time for the offense.

Scheinberg, who pleaded guilty to one count of operating an illegal gambling business in March, could have faced a prison sentence of between 12 and 18 months, according to Inner City Press, the only media present at the hearing. Charges of bank fraud and money laundering were dropped as part of his plea deal.

Judge Lewis Kaplan of the US District Court for the Southern District of New York, ultimately opted not to impose a custodial sentence.

“I am pleased that Judge Kaplan has determined today not to impose a prison sentence in my case,” Scheinberg said in a statement to iGB North America.

“PokerStars played an important role in creating today’s global regulated online poker industry by running an honest and transparent business that always treated its players fairly,” he said. “I am particularly proud that in 2011, when PokerStars exited the United States, all of its American players were made whole immediately.

“Indeed, PokerStars reimbursed millions of players who were owed funds from other online companies that could not or did not repay those players.”

As Scheinberg noted, the Judge’s decision was influenced by mitigating circumstances, namely the fact that PokerStars assumed Full Tilt Poker’s debts, including $184m in non-US player balances, after acquiring that business, following its collapse in the wake of the Black Friday indictments.

As part of the agreement to acquire its former rival, the operator agreed to settle a civil forfeiture and civil money laundering action, which saw it forfeit $547m to the US Department of Justice. This did not result in the charges against Scheinberg being dismissed, though he was banned from serving in a managerial or directorial role for the operator as part of the settlement.

This resulted in his son Mark taking charge of the business. Mark, who served as chief executive of PokerStars parent Rational Group until its acquisition by Amaya Gaming Group, then agreed a $50m settlement to release him from any claims related to the Black Friday indictments, in 2013.

Those indictments, unsealed in April 2011, saw US facing sites for PokerStars, Full Tilt Poker and Absolute Poker and Ultimatebet operator Cereus shut down, and their executives pursued by the US authorities.

Among the others indicted were PokerStars director of payments Paul Tate, Raymond Bitar, chief executive of Full Tilt parent TiltWare, alongside its payments director Nelson Burtwick (a former PokerStars employee) and Absolute Poker part-owner Scott Tom.

Scheinberg was the last of those indicted to face charges, when surrendered to the US authorities in January this year, travelling from his home in Switzerland to New York, and agreed to remain in either that city or Washington DC.

Read the full story on iGB North America.

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