PokerStars founder Isai Scheinberg pleads guilty in New York

PokerStars founder Isai Scheinberg is facing a maximum sentence of five years in prison after pleading guilty Wednesday to running a multimillion-dollar illegal online poker business in the United States.

Scheinberg was the final defendant to be charged by the US Attorney for the Southern District of New York for continuing to make online poker available to US customers after the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) in October 2006.

A dual Canadian and Israeli national, Scheinberg was arrested in Switzerland in June at the request of US authorities. In early October he was ordered to be extradited to the US by the Swiss Federal Office of Justice, a decision he initially appealed. Scheinberg subsequently withdrew his appeal and surrendered to US federal agents in January of this year, when he was arraigned before US Magistrate Judge Katharine Parker.

With Scheinberg’s guilty plea, all 11 defendants originally charged in the 2011 indictment have now pled guilty, including Raymond Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie, and John Campos.

“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,” said Manhattan US Attorney Geoffrey Berman.

“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 US law.”

According to the indictment filed in March 2011 in Manhattan federal court, PokerStars, along with Full Tilt Poker and Absolute Poker, continued illegally to make internet poker available to US customers until March 2011. 

In pleading guilty, 73-year old Scheinberg admitted that he knew operating a business that offered internet poker to New Yorkers violated state law, and that it was the clear position of the federal government that offering online poker in the US violated federal law. 

In 2012, PokerStars and its related companies agreed to settle a civil forfeiture and civil money laundering action brought by the Office, with PokerStars forfeiting $547m to the government and assuming approximately $184m in foreign player liabilities from Full Tilt Poker subject to the settlement. 

Additionally, in June 2013, Mark Scheinberg, Isai Scheinberg’s son, agreed to forfeit an additional $50m of distributions he received from the operation of PokerStars.

Isai Scheinberg pled guilty before US Magistrate Judge Sarah Cave on Wednesday to one count of operating an illegal gambling business, in violation of 18 U.S.C. § 1955. He faces a maximum sentence of five years in prison and is scheduled to be sentenced by US District Judge Lewis Kaplan at a later date.