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United States of America v. Isai Scheinberg
Case Number: 1:10-cr-00336-BCM
Judge: Sarah L. Cave
Court: United States District Court for the Southern District of New York (New York County)
Plaintiff's Attorney: Olga Zverovich, Sarah Lai, and Jason Cowley
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New York, NY - The United States of America charged Isai Scheinberg with Internet gambling.
Isai Scheinberg, the founder and former executive of PokerStars, an online poker company, pled guilty today to running a multimillion-dollar unlawful internet gambling business. SCHEINBERG pled guilty before U.S. Magistrate Judge Sarah L. Cave.
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.”
As alleged in the Indictment filed in March 2011 in Manhattan federal court, PokerStars was founded in approximately 2001, with headquarters in the Isle of Man. PokerStars offered online poker games to players around the world, including in New York, New York. SCHEINBERG was PokerStars’ founder and principal. On October 13, 2006, the United States enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), making it a federal crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” With the enactment of UIGEA, leading internet gambling businesses – including the leading internet poker company doing business in the United States at that time – terminated their United States operations. However, PokerStars, along with Full Tilt Poker and Absolute Poker, continued illegally to make internet poker available to U.S. customers through March 2011.
In pleading guilty today, SCHEINBERG admitted that he knew operating a business that offered internet poker to New Yorkers violated state law, and that it was the clear position of the U.S. government that offering online poker in the United States violated federal law. Nonetheless, Scheinberg decided to continue running his multimillion-dollar online poker business in the United States.
In 2012, PokerStars and its related companies (the “PokerStars Companies”) agreed to settle a civil forfeiture and civil money laundering action brought by the Office. That settlement involved, among other things, the PokerStars Companies forfeiting $547 million to the United States and assuming approximately $184 million in foreign player liabilities of another online poker company subject to the settlement. Additionally, in June 2013, Mark Scheinberg, ISAI SCHEINBERG’s son, agreed to forfeit to the United States an additional $50 million of distributions he received from the operation of the PokerStars Companies.
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SCHEINBERG, 73, a dual Canadian and Israeli national, was arrested in Switzerland on June 7, 2019, based on the U.S. charges. In early October 2019, SCHEINBERG was ordered to be extradited to the United States by the Swiss Federal Office of Justice, a decision he initially appealed. SCHEINBERG subsequently withdrew his appeal and surrendered to U.S. federal agents on January 17, 2020. He was arraigned before United States Magistrate Judge Katharine H. Parker on the same day.
SCHEINBERG pled guilty to one count of operating an illegal gambling business, in violation of 18 U.S.C. § 1955. SCHEINBERG faces a maximum sentence of five years in prison. He is scheduled to be sentenced by United States District Judge Lewis A. Kaplan on a date to be determined.
The maximum sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.
Mr. Berman thanked the Federal Bureau of Investigation and Homeland Security Investigations for their outstanding work and perseverance in the investigation and prosecution of this case, and Swiss authorities and the Department of Justice Criminal Division’s Office of International Affairs for their assistance with SCHEINBERG’s arrest and extradition proceedings.
With SCHEINBERG’s guilty plea, all 11 defendants – including Raymond Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie, and John Campos – originally charged in the Indictment have now pled guilty. All but SCHEINBERG have been sentenced.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.
CONSPIRACY TO DEFRAUD THE UNITED STATES
Unlawful Internet Gambling Enforcement Act: Pokerstars
BANK FRAUD AND WIRE FRAUD
MONEY LAUNDERING - FRAUD, OTHER
Outcome: 03/25/2020 Minute Entry for proceedings held before Magistrate Judge Sarah L Cave:Change of Plea Hearing as to Isai Scheinberg held on 3/25/2020. Defendant present with Barry Boss. A.U.S.A. Olga Zverovich present for the Government. Defendant withdraws plea of not guilty and enters a plea of Guilty to Count Five of the Superseding Indictment. Mag. Judge Sarah L. Cave recommends that Judge Kaplan accept the plea. Court reporter present. Defendant continued bail. PSI Ordered. Transcript Ordered. No Control Date was set. (jw) (Entered: 03/26/2020)
03/25/2020 Change of Not Guilty Plea to Guilty Plea as to Isai Scheinberg (2) Count 5. (jw) (Entered: 03/26/2020)
03/25/2020 Minute Entry for proceedings held before Magistrate Judge Sarah L Cave: Plea entered by Isai Scheinberg (2) Guilty as to Count 5. (jw) (Entered: 03/26/2020)
03/25/2020 Order of Referral to Probation for Presentence Investigation and Report as to Isai Scheinberg. (Signed by Magistrate Judge Sarah L Cave on 3/25/20)(jw) (Entered: 03/26/2020)
03/25/2020 424 CONSENT TO PROCEED BEFORE US MAGISTRATE JUDGE ON A FELONY PLEA ALLOCUTION by Isai Scheinberg. (jw) (Entered: 03/26/2020)