United States v. Scheinberg

United States v. Scheinberg, No. 1:10-cr-00336 (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,[ 1] 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.[ 1] A companion civil case, United States v. Pokerstars, et al., 11 Civ. 2564 (2011),[ 2] included Full Tilt and Cereus (Absolute Poker), Ultimate Bet, Oldford Group, Rational Entertainment Enterprises, and many others as defendants and sought the recovery of forfeiture equalling approximately $3 billion in assets belonging to the companies.[ 3] After the indictment was unsealed on April 15, 2011, a date quickly dubbed Black Friday by the online poker community,[ 4] [ 5] PokerStars and Full Tilt stopped offering real money play to their United States customers.[ 6] 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 Howard Lederer, Chris Ferguson, and Rafael Furst.[ 7] [ 8]

On April 15, 2011, the U.S. Department of Justice seized the .com internet addresses of the three online gambling sites, replacing them with a takedown notice. On April 20, 2011, the U.S. Attorney's office returned the Pokerstars.com domain to the company, facilitating the withdrawal of U.S. players' funds. About 76 bank accounts in 14 countries were frozen, including an unknown amount of player funds.[ 9] Prosecutors demanded prison for 11 defendants, including website founders, U.S. payment processors, and a Utah bank executive, for a complex fraud scheme circumventing UIGEA banking laws. In response, Antigua and Barbuda weighed WTO action. The implicated firms stopped U.S. ads, leading to the cancellation of poker TV shows. Full Tilt's eGambling license was suspended in June, stopping all online activities, and permanently revoked by the Alderney Gambling Control Commission on September 29.

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