United States v. Scheinberg
| United States v. Scheinberg | |
|---|---|
| United States District Court for the Southern District of New York | |
| Full case name | United States v. Isai Scheinberg, et al. |
| Citations | 10 Cr. 336 (2011) |
| Case history | |
| Related actions | United States v. PokerStars, et al., 11 Civ. 2564 (2011) |
United States v. Scheinberg, 10 Cr. 336 (2011), is a United States federal criminal case against the founders of the three largest online poker companies, PokerStars, Full Tilt Poker and Cereus (Absolute Poker/Ultimatebet), and a handful of their associates, which alleges that the defendants violated the Unlawful Internet Gambling Enforcement Act (UIGEA) and engaged in bank fraud and money laundering to process transfers to and from their customers. A companion civil case, United States v. PokerStars, et al., 11 Civ. 2564 (2011), includes Full Tilt and Cereus as defendants and seeks the recovery of forfeiture equalling approximately $3 billion in assets belonging to the companies. After the indictment was unsealed on April 15, 2011, a date quickly dubbed Black Friday by the online poker community, PokerStars and Full Tilt stopped offering real money play to their United States customers. Three years after the start of the poker boom in 2003, the U.S. Congress passed UIGEA to extend existing gambling laws into cyberspace. The law made processing payments for illegal online gambling a crime; however, the defendant companies remained in the U.S. market in the belief that the law did not cover poker. A former payment processor for the companies turned state's evidence after initially being charged with violating UIGEA himself. On September 20, the civil suit was amended claiming individual fraud by Messrs. Howard Lederer, Chris Ferguson and Rafael Furst.
The U.S. Department of Justice seized the .com internet addresses of the three online gambling sites, replacing them with a takedown notice, but let Full Tilt and PokerStars use them again once they pledged to no longer serve the U.S. About 76 bank accounts in 14 countries were frozen, including an unknown amount of player funds. The prosecutors are seeking jail sentences for the 11 criminal defendants including site founders and executives, U.S. payment processors, and an executive of a small Utah bank, who prosecutors maintain were engaged in an elaborate criminal fraud scheme, using the bank in Utah to mis-code transactions with other banks to bypass UIGEA restrictions.
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