On Wednesday, the founder of online poker giant PokerStars admitted to operating an illegal online gambling business. The admission comes almost a decade after he along with other online poker executives were indicted in New York.
The Last One
Isai Scheinberg was the remaining individual that had yet to face charges stemming from Black Friday. In March 2011, New York federal prosecutors charged him along with many others with bank fraud, illegal gambling and money laundering. The other executives have all pled guilty and earned their sentencing. In 2012, PokerStars agreed to pay $731 million in settlement charges with the Justice Department, in the process not admitting any wrongdoing.
Scheinberg was arrested last summer in Switzerland and extradited to the US. He potentially faces five years in prison, with prosecutors agreeing to a much lighter sentence of 12 to 18 months due to a plea agreement.
In a statement for Schinberg on the matter: “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.”
Scheinberg came forward, wanting to put the matter behind him and was able to see all charges dropped except for being in violation of the 1971 Gambling Act.
And players were paid back. Over a few years, PokerStars set up a reimbursement program where players could file for compensation based on what they had in their PokerStars and Full Tilt accounts. It took some time, but players were paid back in waves, able to access the cash that had been tucked away for a very long time.
Back Story
In April 2011, the infamous Black Friday occurred, where online poker sites were shut down in the US and players were left without their funds. Sites like PokerStars, Full Tilt and Absolute Poker were affected. At the time, the government decided to seize the domain names and funds of these operators due to not being in line with the Unlawful Internet Gaming Enforcement Act of 2006.
PokerStars was greatly affected but able to absorb the impact unlike brands such as Absolute Poker and Unibet. PokerStars was bought by Amaya Gaming and was able to see a big turn-around, even operating in the US today.
PokerStars offers online poker gaming services in the US via Pennsylvania and New Jersey and should advance further into other states if legislation is passed allowing online poker to take place.
It was surprising that Scheinberg finally turned himself in after all these years. At the age of 73, perhaps he was tired or running and wanted to own up to the charges he faced. It will still be some time before a prison sentence is decided upon. Some feel that he will spend time in jail while others think that leniency will be given in the case. Judge Lewis A. Kaplan is set to rule on the matter at a later date.
