PokerStars founder Isai Scheinberg gets off easy15th October 2020 |
The PokerStars founder who has been living abroad for years to avoid prosecutors was sentenced to time served and a $30,000 fine as he pled guilty to a single federal gambling charge.
Isai Scheinberg eventually surrendered to U.S. authorities in February 2020 following an international extradition request in Switzerland. It is quite clear from the light sentence that the PokerStars founder agreed to go back to the United States voluntarily.
Closing the books on the Pokerstars founder concludes a very long and tangled ordeal for online poker. His sentence was met with varied reactions of members of the poker community. World Series of Poker broadcaster Norman Chad fired off a couple of tweets laced with sarcasm.
“I got a $150 ticket for jaywalking in West Hollywood once, and I hadn’t even jaywalked. I wish I had Isai Scheinberg’s lawyers,” Chad tweeted and added #SometimesCrimePays.
Chad was pretty quick to suggest that Pokerstars founder Scheinberg’s sentence was “pretty good for running an unlawful gambling business that netted him, oh, somewhere north of $30,000.”
The remark is a reference to the sale of PokerStars to Amaya in 2014, which was a deal worth $4.9 billion, at a time when PokerStars was privately owned by Scheinberg.
Poker’s Black Friday
Ask any online poker player where they were on April 15, 2011, and they will be able to tell you with pinpoint accuracy. That day was the darkest day to date for online poker players and it was quickly dubbed Black Friday.
PokerStars, Full Tilt Poker and Absolute Poker were targeted by the FBI and the U.S. Attorney’s office. Charges were levied against all three companies based on the Illegal Gambling Act of 1955 and the Unlawful Internet Gambling Enforcement Act of 2006. The charges cited fraudulent methods to get around federal laws and tricking banks into processing payments to players.
A total of 11 defendants were named: Pokerstars founder Isai Scheinberg and Paul Tate the director of PokerStars, Raymond Bitar and Nelson Burtnick of Full Tilt Poker with Scott Tom and Brent Beckley of Absolute Poker. Chad Elie, John Campos, Bradley Franzen and Ryan Lang, who worked for payment processors were also indicted on several charges.
U.S. Attorney for the Southern District of New York at the time, Preet Bharara, said in a press release that: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to ensure the continued flow of billions in illegal gambling profits. Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud.”
“Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they cannot bear to be parted from their profits.”
Pokerstars Founder Fled to Europe
To avoid prison time, Scheinberg traversed the Atlantic and settled in Europe where PokerStars have offices in England, Malta, and Isle of Man to name a few. Within two months of Black Friday, PokerStars and Full Tilt Poker offices in Costa Rica were raided by local authorities with the aid of FBI. Employees who had been warned of the upcoming bust even fled the country. Some of them did not even bother to pack their bags.
What Full Tilt Poker players did not know at the time was that they would be caught up in another scandal. Founders of the company had been misappropriating player funds to the tune of millions. High profile poker pros such as Howard “The Professor” Lederer and Chris “Jesus” Ferguson were accused of spending Full Tilt Poker players money as if it was their own.
When Full Tilt Poker was dragged into the Black Friday allegations, some of their company accounts were frozen and this is how thousands of players found out that they could not get to their money. What was even worse, there was no money for them to get.
PokerStars to the rescue
When the Full Tilt Poker scandal unravelled, PokerStars stepped in and bought the company and subsequently settled all of its debts to its players. An unprecedented event which may have contributed to Scheinberg’s easy sentence.
The poker community may have forgiven Ferguson for the Full Tilt scandal, but Lederer has not received the same kind of welcome. In 2016 Lederer bought into Event #16: $10,000 No-Limit 2-7 Lowball Draw Championship, his first appearance at a World Series of Poker Event since 2010.
He did not cash out at the event and was chased by media for a comment but declined several opportunities, only offering, “I’ve made my statement.”
Online poker today
Since Black Friday, online casino games like has made a remarkable recovery and PokerStars and Full Tilt are currently owned by holding company Flutter Entertainment. Flutter was created by the merger of Paddy Power and Betfair, and the later acquisition of The Stars Group. Its revenue in 2019 clocked in at £2.14 billion.
The same cannot be said for Absolute Poker. In May of 2011 the company filed for bankruptcy and in December that year, co-founder Brent Buckley pleaded guilty to misleading banks. The following year, in April, he was sentenced to 14 months.
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