PokerStars founder Isai Scheinberg is on United States soil for the first time in a couple decades after turning himself in to federal authorities to face charges stemming from the Black Friday indictments.
Writing was on the wall
According to Forbes.com, Scheinberg was visiting Switzerland a few months ago when federal prosecutors attempted to have him extradited to the U.S. He fought it, but at some point realized that it was pointless. He wasn’t going to win. Thus, he voluntarily traveled to New York on Friday, January 17th, to surrender himself to federal agents.
Once in front of a court, he pleaded not guilty and was released on $1 million bail. Federal prosecutor Olga Zverovich told the court on Wednesday that the prosecution and Scheinberg were in the midst of a negotiation and that they have “an agreement in principle on the basic terms.”
Thus, it sounds like the 73-year old Scheinberg will likely avoid a lengthy prison term, if he even has to spend any time behind bars at all.
PokerStars’ rise to dominance
Many online poker players might not remember, but PokerStars was not always the giant it is today (even if it has come down significantly from the Mount Olympus upon it which it used to be perched). Before and during the poker boom, partypoker was the dominant force in the industry (it was more properly written “PartyPoker” at the time), but PokerStars started its move up the charts in 2003, thanks to Chris Moneymaker winning the World Series of Poker Main Event.
Moneymaker famously gained entry into the Main Event via a PokerStars online satellite, a novel concept back then. PokerStars became the site for tournaments.
But it was 2006 when PokerStars took over. When the UIGEA passed in October, most online gambling sites, including partypoker, exited the U.S. market, fearful of possible legal ramifications (though the UIGEA targeted means of payment and did not make online poker illegal). PokerStars, Full Tilt Poker, Absolute Poker, and UltimateBet were the main players that stayed, claiming that online poker was lawful.
PokerStars and Full Tilt, in particular, entered an arms race and Stars quickly found massive success.
Black Friday
On April 15th, 2011, though, the day that has become known as Black Friday, the Department of Justice unsealed an indictment, naming Isai Scheinberg along with ten other men with charges of money laundering, illegal gambling, and bank fraud. Player funds were frozen and domain names were seized.
PokerStars eventually got its domain back and resumed the poker games internationally, the only one of the “big four” sites to do so. Absolute and UltimateBet just disappeared, their ownership taking whatever money they had left with them. Full Tilt folded, its principals embroiled in a scandal that found them to have paid themselves with player funds.
In 2012, PokerStars’ parent company, the Rational Group, settled its civil case with the Department of Justice, agreeing to fork over more than $700 million. As part of that deal, PokerStars also acquired Full Tilt and paid its customers the money they were owed over the course of several years.
Despite the criminal charges, Scheinberg, and in turn PokerStars, was seen as a hero of sorts in the poker community, as if it wasn’t for Stars, hundreds of millions of dollar in Full Tilt funds would have been lost. There was even enough to pay Absolute Poker players.
There was even a push a few years ago to get Scheinberg into the Poker Hall of Fame. He was certainly deserving, but he was also the only one of the eleven people named in the indictment that stayed out of the U.S. and avoided facing the charges. With crimes hanging over his head, it was hard for many to get behind a Scheinberg Hall of Fame induction.