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PokerStars' legal settlement with U.S. law enforcement

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Two years after PokerStars was shut down by the U.S. Department of Justice (DOJ), the world’s most popular Internet poker site settled with the DOJ to resolve forfeiture demands by American law enforcement authorities.

Last year, the chairman of PokerStars agreed to pay $50 million in connection to a money laundering lawsuit the company settled in 2012. Mark Scheinberg, chairman of the Isle of Man-based company, had continued to receive distributions for PokerStars that were subject to forfeiture, according to a ruling in the U.S. District Court in New York.

Scheinberg agreed to the settlement as he “wishes to fully and finally resolve this matter,” stated court documents. A company spokesman said in a statement that the “agreement is not in response to any action that had been brought against Mark and contains no admission of wrongdoing, culpability or guilt on his behalf.”

In July 2012, PokerStars agreed to pay $731 million to settle the money laundering lawsuit filed in 2011 by the U.S. Department of Justice. The $50 million payment by Scheinberg is in addition to that amount.

Included in the $731 million is $547 million that was used used to reimburse U.S. customers for funds lost or tied up in Full Tilt Poker. Full Tilt, which previously operated as a rival site, was acquired by PokerStars earlier this year.

In 2006, congress passed legislation which banned online gambling. However, the federal law went largely unenforced until April 15, 2011 which was dubbed “Black Friday” by the industry. Federal prosecutors arrested executives and investors of several Internet poker sites.

The DOJ’s lawsuit alleged that the poker companies used fraudulent methods in order to get banks to process online payments.

Critics contend that the Justice Department narrowly focused their targeting towards Internet poker operators and largely absolved financial institutions and payment processors from any civil and criminal liability. Critics contend that some banks and processors were knowingly complicit in enabling Internet gambling by processing millions of transactions.

In April 2013, former Full Tilt Poker CEO Raymond Bitar pleaded guilty to criminal charges and was ordered to pay $40 million. Criminal charges were not filed against Mark Scheinberg of PokerStars.



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