PokerStars Founder Free to Go with Fine and Time Served
Another chapter of the Black Friday saga is over. PokerStars founder Isai Scheinberg received his sentence from the US Court this week, putting an end to the final case stemming from the online poker indictments of April 15, 2011.
Judge Lewis A. Kaplan ultimately decided that Scheinberg made a mistake that should not ruin the rest of his life. He wrapped it up with a sentence of time served and a fine of $30,000, and ordered that Scheinberg’s passport be returned.
That is that.
A few loose ends remain open in the larger picture of Black Friday, such as payments still pending to victims of Absolute Poker and UltimateBet. But the indictments and charges, court appearances and sentences are in the books.
Years Avoiding US Charges
Most people in poker know the story of Isai Scheinberg and his founding of PokerStars. We wrote a fairly brief version of it here.
But the PokerStars story came to an abrupt halt on April 15, 2011, the day the poker world knows as Black Friday. US Attorney for the Southern District of New York, Preet Bharara, unsealed indictments for persons in and related to the online poker industry. The US Department of Justice also seized four of the largest poker sites in the world – PokerStars, Full Tilt Poker, Absolute Poker, and UltimateBet.
Scheinberg left PokerStars per the US government’s request, as it was a part of the eventual PokerStars settlement to clear the company name.
While not exactly “on the run,” as Scheinberg didn’t travel to the United States often anyway, he simply kept a low profile. But the US government, long after Bharara left his position and PokerStars was welcomed back into the US online gambling market in New Jersey and then Pennsylvania, continued to pursue Scheinberg.
Switzerland authorities nabbed him the 73-year-old Scheinberg in June 2019.
Per the extradition treaty with the United States, Scheinberg would have been on his way to America to face charges except for an appeal Scheinberg made to the Swiss Federal Office of Justice. When that failed, the Swiss put him on a plane to New York City. When he landed on January 17, 2020, US federal agents took him into custody.
Working with the Justice System
Agents took Scheinberg directly to a Manhattan federal courtroom, where he was arraigned. He pleaded not guilty to the charges, and the court took his passport while releasing him on a $2,000,000 personal recognizance bond.
Scheinberg set up a temporary residence in New York while negotiating with the US Attorney’s office. By March 25, they had a deal.
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. #SometimesCrimePays
— Norman Chad (@NormanChad) September 23, 2020
The original charges against Scheinberg were as follows:
-1. Conspiracy to violate the Unlawful Internet Gambling Enforcement Act (UIGEA)
-2. Violation of the UIGEA
-3. Operation of an illegal gambling business
-4. Conspiracy to commit bank fraud and wire fraud
-5. Money laundering conspiracy
The cumulative potential prison time was a maximum of 65 years, along with up to $2 million, forfeiture of proceeds, and years of supervised release.
However, US Attorney Geoffrey Berman announced that the deal with Scheinberg included a guilty plea but only to “running a multimillion-dollar unlawful internet gambling business.” Scheinberg admitted, as a part of his plea, that he knew offering internet poker in the US violated New York state and US federal laws, but he willingly did it anyway.
The crime to which Scheinberg pleaded was a violation of the Illegal Gambling Business Act (IGBA). Judge Kaplan could have sentenced him to up to 18 months in prison.
Waiting for Sentencing
The court set the sentencing hearing for September 23, 2020.
Two weeks prior to that date, Attorney Paul Shechtman of Bracewell, a New York-based law firm, submitted a letter to the court. It conveyed that the Probation Office recommended a 26-day sentence, which Scheinberg already served, as the sentence.
The attorney argued that Scheinberg’s accomplishments and “exemplary life, marked by integrity, humility, and concern for others” combined with other factors to make this an “exceptional case.” The 35-page letter went on to describe his good deeds, his notable relationships in Israel, Canada, and the Isle of Man, and his positive impacts on those countries.
The document also gave some insight into the years since the 2011 indictment.
Scheinberg spent that time with his wife in Canada, England, Israel, and the Isle of Man. He also informed each of those countries of his presence there. “Importantly, for much of that period, he was in contact, through counsel, with the Southern District of New York, seeking to obtain a non-felony disposition.”
The reason the Scheinbergs were in Switzerland in 2019 was to obtain specialized medical treatment for Dora via a clinical trial for migraines. He was taken into custody, where he remained for 26 days. He argued against extradition, hoping to find agreement with the US Attorney’s office. Ultimately, his son met him in Switzerland, and the two traveled together to New York.
“Mr. Scheinberg regrets not coming to New York earlier, but he was not in hiding flouting the law.”
The appendices included with the document submission included emails to him upon the sale of PokerStars to Amaya in 2014. The 100-plus pages also included letters to the court vouching for Scheinberg’s character and life’s work. There were letters from family members, chess masters and members of charitable organizations, former colleagues, a rabbi and the official residence of the President of Israel, retired IDF generals and the former online gaming regulator of the Italian government, former Poker Players Alliance Executive Director John Pappas, and former US Representative Richard Gephardt.
His Day in Court
Inner City Press reported from the scene on the day of Scheinberg’s sentencing.
Exclusive: Isai Scheinberg of @PokerStars Gets Time Served Sentence and $30,000 Fine From #SDNY Judge Lewis Kaplan In Socially Distanced Courtroom, Passport To Be Returned, Good Deeds Including To SDNY Arraignments Part Clerk Described https://t.co/1ZLBacaWMh pic.twitter.com/SXc5dkIs7m
— SDNYLIVE (@sdnylive) September 23, 2020
Scheinberg and his wife of 52 years appeared in the courtroom with Attorney Barry Boss of Bracewell. The accused read a statement about his life and the Black Friday indictment and subsequent conviction.
Judge Kaplan said, in part, that he didn’t condone what Scheinberg did, but the world is made of fallible people. Scheinberg made a “big mistake” but one that should not ruin what remains of his life. He then announced the sentence of time served (the 26 days in Switzerland) and ordered that he pay a $30,000 fine plus a $100 special assessment fee.
After the sentence, Scheinberg provided a statement to Pokerfuse, which read:
“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. I am particularly proud that in 2011, when PokerStars exited the United States, 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.”
— Nick Jones (@pokerprojones) September 24, 2020