PokerStars’ founder Isai Scheinberg has pleaded guilty to illegal gambling charges. The Israeli-Canadian has evaded punishment by the US authorities since the Black Friday scandal all the way back in April 2011.
Isai Scheinberg to End the Black Friday Scandal
Isai Scheinberg’s surrender to the US justice system finally puts to bed the Black Friday scandal. He is the only remaining figure out of 11 defendants that still hasn’t answered his charges.
The 73-year-old flew from Switzerland to New York on January 17th 2020 and was “greeted” at the airport by a group of federal agents waiting to take him into custody.
The very same day Scheinberg found himself in front of a judge and pleaded not guilty to charges of money laundering, bank fraud, and illegal gambling.
After posting $1 million bail Scheinberg was released to await his next appearance in court which was yesterday.
Turnaround
In a huge turnaround, Scheinberg changed his plea to guilty on the charge of operating an illegal gambling business.
It’s difficult to understand what he and his legal team were thinking when denying that he had ever run such a business. The law was as clear as it could be, and the US authorities were never going to let this slide.
Manhattan U.S. Attorney Geoffrey S. Berman said,
“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,”
“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 U.S. law.”
The History
Those of you who are new to the poker scene might not be familiar with what happened nine years ago.
The nuts and bolts of why 11 people were sought by the US legal system is that they ignored a law preventing transactions online to gambing companies. In some cases they outright went out of their way to disguise what was happening.
Looking back, it seems ridiculous to have ever expected to get away with this.
The Unlawful Internet Gambling Enforcement Act of 2006 was the start of the story. Upon seeing this new legislation about to come in, almost every poker site immediately stopped servicing US-based customers.
PokerStars took full advantage, while partypoker, who were the market leaders back then, saw their company shrink massively.
On April 15th 2011 the whole thing came crashing down around our ears. In one fell swoop the US player pool vanished overnight. This caused abject chaos with Full Tilt Poker, Ultimate Bet, and Absolute Poker going under without enough capital to pay out what was owed.
The tale surrounding Isai Scheinberg is far from straight forward. Even while evading US justice he was cooperating with them. He even put together a deal to buy Full Tilt Poker and settle all the debts including payments to the US government.
He has also been negotiating a settlement with the US authorities after initially contesting an extradition request to the Swiss government.
The guilty plea sees Scheinberg facing five years behind bars, with congress reportedly pressing for the maximum term.
But Federal prosecutor Olga Zverovich spoke to Forbes magazine in January with a different story. He explained how they had “an agreement in principle on the basic terms” to avoid jail time.
Check out the latest poker news to find out what happens to Isai Scheinberg.
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