PokerStars boasts over 50 million players, making it the largest poker room on the planet. While players who are new to the gambling scene might associate PokerStars with Mark Scheinberg, his father Isai also deserves an equal share of the credit.
While the entire Scheinberg family tends to be shrouded in mystery, the patriarch is the most notable example. In fact, photos of the man are so rare that it's become something of a running joke. We'll attempt to provide a bio of Isai Scheinberg based on existing information--while certain details will be spotty, it should be enough to help form a basic picture of a man whose contributions to the industry will live on long after he's gone.
Early Years and the Creation of PokerStars
Isai Scheinberg was born in Israel in either 1946 or 1947. While his activities during the first 40 years of his life are largely unknown, he made his mark in Canada during the 1990s as an employee for IBM (after transferring from their offices in Israel). During these years he was described as both "driven" and "political," and his efforts resulted in a tool known as Unicode, which allowed computers in different countries to understand a common script.
In 1988, he purchased a home in the Toronto suburb of Richmond Hill. He's still listed as the owner of the property, but it's unknown whether the multi-millionaire and possible billionaire still lives there. It's not even known if he still lives in Canada, as he largely disappeared from public view after the U.S. Department of Justice initiated criminal proceedings against him.
Somewhere along the way, he also developed a passion for poker. In the 1996 World Series of Poker, he finished 25th in the Texas Hold'em event. A few years later, his company would help revolutionize the game and bring it into millions of households around the globe.
In 2000, he founded a software development firm known as PYR Software. Located in a Toronto suburb between a Persian restaurant and a gas station, this company would serve as the birthplace for PokerStars, the greatest success story in the world of online poker. Along with son Mark, the elder Scheinberg launched a "for fun" beta version of the site on September 11, 2001. Three months later, they were offering real-money wagering.
Passing on the New Orleans Saints
In 2006, New Orleans Saints owner Tom Benson considered selling the franchise in the aftermath of Hurricane Katrina. When the director of communications for PokerStars learned of this, he prepared a proposal suggesting that Scheinberg purchase the team for $600 million.
Even if the NFL rejected the deal, it was suggested that the widespread media attention would provide the gambling company with a tremendous amount of free publicity. The founder of PokerStars decided against buying the future Super Bowl champions, although the reasons why have never been made clear. One possible reason was to stay off the radar of the U.S. government as much as possible, although the company's total disregard for the Unlawful Internet Gambling Enforcement Act had already made them a prime target.
United States vs Scheinberg
On March 10, 2011 a secret grand jury in the U.S. district court of New York handed down a sealed indictment, and it would later be unsealed on April 15th, 2011 (a date now known in the gambling community as "Black Friday"). The case, United States vs. Isai Scheinberg et al, initiated criminal proceedings against several leading figures in the online poker industry, as well as several of their associates.
A total of 11 people were indicted, including the following:
- Isai Scheinberg - Founder of PokerStars
- Raymond Bitar - The CEO of TiltWare, the software company for Full Tilt Poker
- Paul Tate - PokerStars director of payments
- Scott Tom - Absolute Poker co-owner
- Nelson Burtwick - Director of payments for PokerStars and TiltWare
- Ryan Lang - Payment processor
- Bradley Franzen - Payment processor
- Ira Rubin - Payment processor
- Brent Beckley - Director of risk management and payment for Absolute Poker
- John Campos - Co-owner of SunFirst Bank and vice chairman of the board
- Chad Elie - Payment processor
The first count that Isai Scheinberg was charged with was Unlawful Internet Gambling Enforcement Act Conspiracy. According to the indictment, he and the other heads of the major online poker companies used fraudulent methods to avoid the voluntary ban that most U.S. banks had placed on Internet gambling. The case charged Scheinberg with deceiving various American financial institutions in order to process billions of dollars in payments.
In some instances, this was supposedly accomplished by disguising money obtained from American customers as payments to hundreds of different fake online merchants and other businesses not affiliated with the gaming industry. The poker companies were able to accomplish this with the assistance of payment processors for credit cards and e-checks.
Another example involved approaching small banks that were facing financial difficulty. These businesses would receive a significant boost in income by processing gambling transactions, and they also received the promise of future investments in excess of several million dollars. In at least one case, an official at one of these locations also received a personal payment.
The second count charged that Scheinberg knowingly violated state and federal laws by accepting wagers from U.S. customers during the period of October 2006 through March 2011. This count specifically dealt with the actions of PokerStars.
The third count against Scheinberg charged that he had knowingly supervised and financed an illegal gambling business from 2001 through March 2011, specifically one that facilitated online poker. This was a violation of New York State Penal Law sections 225.00 and 225.05, as well as numerous laws in other states.
Another count charged several defendants, including Scheinberg, with conspiracy to commit bank and wire fraud. In addition, he was also charged with a count of money laundering conspiracy.
Several counts sought forfeiture of property from the defendants, including $1.5 billion from PokerStars. It also called for the removal of all of Scheinberg's rights, titles, and interests in PokerStars and various other companies under their umbrella.
The charge of conspiracy to commit bank fraud also demanded an additional $2 billion forfeiture of property obtained from illegal gambling activities. In addition, the charge involving money laundering ordered all property involved in the offense to be seized, including at least $2.5 billion in American dollars.
Civil lawsuits were also filed against PokerStars, but these were dismissed on July 31st, 2012, when the company reached an agreement with the Department of Justice. The terms of this deal stated that PokerStars would pay $547 million to the Justice Department, as well as an additional $184 million to overseas poker players.
Criminal charges, however, are still pending against Isai Scheinberg. Several of his co-defendants have either been captured or surrendered themselves to U.S. authorities. Brent Buckley received 14 months in prison, while Ira Rubin was sentenced to three years. John Campos pleaded guilty to one misdemeanor charge in 2012 and received a sentence of three months.
Given his status as one of the primary architects of the online gambling industry, it's likely that Scheinberg would be facing years of incarceration if convicted. It's unlikely that this will ever come to pass, however, especially if he stays out of the United States and beyond the reach of its authorities.
Poker Hall of Fame Snub
Isai Scheinberg has repeatedly been passed over for inclusion in the Poker Hall of Fame. Despite his contributions to the rise of the online gaming industry, his business dealings over the years have made a number of enemies. This includes executives from Caesars Palace, who also happen to serve as the gatekeepers for the Poker Hall of Fame. As long as the current arrangement stands, it's unlikely that he will ever gain admittance (or even receive a nomination).
Amaya Gaming Buys PokerStars
PokerStars had made repeated attempts to break back into the U.S. market, specifically by buying a casino in Atlantic City and taking advantage of new laws that allow for online gaming as long as the player is physically present within the state. The approval for such a transaction, however, was denied due to the presence of Isai Scheinberg and his continuing legal troubles with the Department of Justice.
This problem became a moot point in 2015, when Amaya Gaming Group from Canada purchased the Rational Group, the parent company of both PokerStars and Full Tilt Poker. This purchase will remove the company's founders, and Amaya should be able to move forward with a planned PokerStars presence in Atlantic City and other US states where laws allowing online gambling under specific parameters.
While Isai and Mark Scheinberg will be removed from the equation, they've been more than fairly compensated. The total sale amounted to $4.9 billion, and there has been immediate speculation that this would give the elder Scheinberg the necessary funds to work out a deal with the Department of Justice. In order to lift the criminal charges and eliminate a case that's been lingering for over three years, it's likely that he would need to pay a fine worth hundreds of millions of dollars.
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