PokerStars Co-Founder Isai Scheinberg Avoids ‘Black Friday’ Jail Time, Will Pay $30,000 Fine

  • The 74-year-old has been sentenced to time served and a $30,000 fine in US District Court
  • Case relates back to April 15, 2011 indictment against a number of US-facing poker websites
  • Scheinberg is the last of 11 'Black Friday' defendants to face trial after his March guilty plea
  • Judge's leniency attributed to PokerStars' settlement of Full Tilt Poker debts
PokerStars website
Isai Scheinberg, co-founder of PokerStars, has avoided a jail sentence but will pay a $30,000 fine for charges relating to the ‘Black Friday’ case. [Image: Shutterstock.com]

Penalty for illegal gambling operation

Isai Scheinberg, co-founder of online poker brand PokerStars, has avoided a jail time sentence in a US District Court case relating to illegal gambling operations. The 74-year old was instead ordered to pay a $30,000 fine.

The allegations relate back to an April 15, 2011 indictment on what came to be known in the poker world as ‘Black Friday’. This saw the US government seize the largest US-facing poker websites and bring charges against 11 individuals and three corporate defendants.

could have been sentenced to between 12 and 18 months

According to reports from Inner City Press, Scheinberg could have been sentenced to between 12 and 18 months in prison. However, on Wednesday, Judge Lewis Kaplan sentenced the former PokerStars executive to time served and the fine, concluding that his actions were a “big mistake but should not ruin what remains of [his] life.”

The ‘Black Friday’ context

In April 2011, New York federal prosecutors brought charges against Scheinberg and a number of other leading online poker executives whose brand operations in the US were found to directly transgress the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA). The indicted parties faced long prison sentences, while a civil complaint filed against the said companies sought $3bn in assets from their websites.

The aim of the UIGEA was to prohibit gambling companies from processing “restricted transgressions”, which included payments relating to online wagers. The bill’s passage saw partypoker, 888’s Pacific Poker, and a number of other major poker sites leave the US market shortly afterwards. Others such as PokerStars, Full Tilt Poker, and Absolute Poker remained in operation.

Scheinberg is the last of the 11 defendants to answer to his ‘Black Friday’-related charge. The first sentences were dealt to independent third-party payment processors, which included John Campos, Chad Elie, Bradley Franzen, and Ira Rubin. Following this, at least two executives each from PokerStars, Full Tilt Poker, and Absolute Poker were also charged.

Scheinberg pleaded guilty to the single charge of operating an illegal gambling business in March of this year.

Reasons for judge’s leniency

In revealing his ultimate decision, Judge Kaplan commended Scheinberg in “making-whole of the victims of other online poker platforms”, Inner City Press reports.

Scheinberg’s “good works” relate to PokerStars’ takeover of Full Tilt Poker following the collapse of the company after ‘Black Friday’. The acquisition led PokerStars to take on Full Tilt Poker’s debts, which included $184m in non-US player balances.

$547m to the US Department of Justice

It also saw PokerStars contribute $547m to the US Department of Justice to settle a civil forfeiture and civil money laundering action. As part of this settlement, Scheinberg was prohibited from serving in a managerial or directorial role at PokerStars. He was subsequently replaced by his son Mark Scheinberg.

Commenting after the latest ruling in a statement to Online Poker Report, Isai Scheinberg said he was “proud that in 2011, when PokerStars exited the United States, all of its American players were made whole immediately.” He also described how the company “reimbursed millions of players who were owed funds from other online companies.”