Isai Scheinberg, the Founder of PokerStars, has been arrested by federal authorities after turning himself in last week.
Scheinberg Released on $1 Million Bail, Negotiating Deal
Isai Scheinberg, the founder of PokerStars has surrenderedto federal authorities. The 73-year-old has been charged with various gamblingand financial crimes over the years, including money laundering and bank fraud.
On January 17, Scheinberg pleaded not guilty in court on January 17th, and was released from police custody on $1 million bail. His travel will be restricted to only New York and Washington, D.C., as he has surrendered his passports to the authorities.
The Long Saga of Isai Scheinberg
Isai and his son Mark Scheinberg founded PokerStars in 2001.The pair originally operated the brand from Costa Rica and the Isle of Man, buta wrench was thrown into the works in 2006 when the UIGEA (Unlawful InternetGambling Enforcement Act) was passed by American lawmakers.
Despite it being made illegal for PokerStars to operate inthe United States, the Scheinbergs continued to run their site. By 2010, theirbrand was bringing in $1.4 billion in revenue. Most banks were reluctant toprocess online gambling payments, but some managed to get around legal scrutinyby obscuring transactions to do with online poker.
So, in April 2011, federal authorities personally shut PokerStars and other American-facing online poker sites down – a day famously known as “Black Friday” in the online gambling world. At that time, many professionals in the online poker world were charged with gambling-related crimes, former executives from Full Tilt Poker.
PokerStars then began operating outside of the United States,and paid the American government over $730 million to settle the lawsuit thathas been filed against them. Scheinberg sold his take in PokerStars to AmayaGaming in 2014 and has since evaded American authorities.
A few months ago, extradition proceedings were launched whenScheinberg visited Switzerland. At first, he contested it, but eventually decidedto turn himself in.
What Happens Next?
Now that Scheinberg has been released on bail, he will haveto face the charges that have been filed against him. Federal prosecutor OlgaZverovich stated that the US government and Scheinberg are quite far along in negotiatinga deal.
The maximum penalty fo ph646 r violation of the UIGEA is five yearsin prison and a $250,000 fine – or twice the gross gain/loss for each charge.The maximum penalty for wire fraud is 30 years in prison and a $1 million prize,and 20 years for money laundering.
This is going to be an incredibly interesting case, asScheinberg is the last of the gaming executives indicted on Black Friday to be arrested.The gaming industry will be watching closely to see what kind of dealScheinberg strikes up.
