PokerStars Founder Isai Scheinberg Pleads Guilty To Illegal Gambling Charges

PokerStars founder Isai Scheinberg pled guilty to charges of operating an illegal online gambling business Wednesday afternoon in a New York federal court.

The plea comes two months after the 73-year-old duel citizen of Canada and Israel originally surrendered to U.S. authorities. He was released on $1 million bail after initially pleading not guilty to all charges.

On Wednesday, however, he pled guilty to one count of operating an illegal gambling business. Scheinberg is now facing up to five years behind bars.

A Representative of Scheinberg said that the other charges were dropped and Scheinberg is excited to move on.

“Mr. Scheinberg is pleased to put this matter behind him and that all charges other than violating the 1971 Gambling Act have been dropped. Notably, all PokerStars players were paid back immediately and Mr. Scheinberg played an important role in ensuring that all of the players from other sites were repaid as well,” said Scheinberg’s representative.

According to the Department of Justice press release, Congress is recommending the maximum penalty. Scheinberg’s punishment will be levied by Judge Lewis A. Kaplan at a later date.

Scheinberg and 10 other executives of other major online poker rooms were charged with bank fraud, money laundering and illegal gambling in April 2011 on what the poker world refers to as “Black Friday.”

With Scheinberg’s admission of guilt, all 11 charged have now entered guilty pleas.

The government seized the domain names and funds of online poker rooms that were still operating in the U.S. after the 2006 passage of the Unlawful Internet Gaming Enforcement Act. For nearly nine years, Scheinberg stayed outside of the U.S. and continued to operate his business.

Even with the prison time recommended by Congress, it seems unlikely Scheinberg spends time incarcerated. Federal prosecutor Olga Zverovich told Forbes in January that the U.S. had “an agreement in principle on the basic terms” with Scheinberg.

“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,” said Manhattan U.S. Attorney Geoffrey S. Berman in a press release. “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.”

Scheinberg founded PokerStars in 2001 and continued to operate in the legal grey area that existed in the United States after 2006.

In 2012, the company agreed to a civil asset forfeiture settlement wit the government and gave $547 million to the U.S. government. Just a year later, Scheinberg’s son, who took over the company following the 2011 charges, forked over an additional $50 million.

In 2014, the Scheinberg’s sold the company to Amaya for $4.9 billion. The company has since partially re-entered the U.S. market in the now legal and regulated New Jersey and Pennsylvania markets.

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