PokerStars founder Isai Scheinberg was sentenced to time served and $30,000 fine for his participation in an unlawful internet gambling business. The dual Canadian and Israeli national pled guilty on one count back in March and was facing jail time of up to 5 years, but eventually managed to avoid prison.
Isai Scheinberg was charged for his role in unlawful gambling operations after the Unlawful Internet Gaming Enforcement Act (UIGEA) was passed into law in 2006. Back then, most of the online operators elected to leave the market, except for PokerStars, Full Tilt Poker, and the two skins of the Cereus network, Absolute Poker and Ultimatebet.
Black Friday Crackdown on Online Poker
In 2011, the US Department of Justice (DOJ) decided to crack down on these operators and shut their websites, and after the Black Friday, Scheinberg was one of 11 people indicted with charges in unlawful gambling. The other 10 indicted have already been apprehended and pled guilty, and served sentences from financial penalties to jail time.
Isai Scheinberg managed to avoid prosecution for almost a decade, but eventually was detained during a trip to Switzerland and initially appealed his extradition order but then decided to withdraw the appeal and surrender to US federal agents. And in March, before Judge Sarah L. Cave, Scheinberg pled guilty on violating the 1971 Gambling Act and charges of bank fraud and money laundering were dropped.
The Sentence
On Wednesday, Judge Lewin Kaplan of the District Court for the Southern District of New York sentenced the 74-year-old to time served and $30,000 fine.
“I am pleased that Judge Kaplan has determined today not to impose a prison sentence in my case. 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.”
Isai Scheinberg
The court decision was obviously influenced by PokerStars commitment to assume Full Tilt’s obligations to players after it acquired the former competitor. Full Tilt collapsed after the Black Friday and left millions of debts, including $184 million to non-US players.
“I am particularly proud that in 2011, when PokerStars exited the US, 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.”
Isai Scheinberg
PokerStars also agreed to settle a civil forfeiture and civil money laundering case with the DOJ, forfeiting $547 million. Despite Scheinberg’s active role in this, charges against him were not dropped, and he was also banned from a managerial or directorial role as part of the settlement.