When PokerStars made the deal with the U.S. government to buy Full Tilt, the company was given immunity for past “wrongs”. As part of the agreement PokerStars did not admit to wrongdoing and the DoJ agreed not to pursue the companies any further which allowed PokerStars to apply for U.S. licenses for both it and Full Tilt if and when online poker is legalized and regulated stateside. At the same time, ongoing civil prosecutions against owners and management of both Pokerstars and Full Tilt were not included in the settlement. That means that Isai Scheinberg, the founder of PokerStars, Paul Tate (Director of Payments for PokerStars), Nelson Burtwick (Director of payments for Full Tilt) and Ray Bitar (CEO of Full Tilt) still face criminal charges for their involvement in the companies when the sites were seized. Under the rules, those mentioned could face up to 5 years in prison for violating the UIGEA and up to 20 years in prison for money laundering. As well, they could face a large fine.

According to a reliable source, the DoJ doesn’t see much benefit in jailing all the listed individuals and wants to cut deals with as many as possible. In 2006 the DoJ agreed to a settlement with Anurag Dikshit, a founder of Party Poker, which provides a precedent. The source said that the DoJ will not cut a deal with Bitar since they see him as an unsympathetic individual in light of the findings that he was running a ponzi scheme but Scheinberg and Tate are different. The source said that Scheinberg has been talking with the DoJ ever since the PokerStars deal was reached and is willing to do what it takes to avoid prison. While no amount has been agreed to the source is confident that the amount will be in the $300 million dollar range – similar to what Dikshit paid. Apparently the government was bandying a billion dollars as a figure they wanted from PokerStars for exoneration so that fine plus any Tate pays if he gets a deal will bring the total well over a billion dollars when combined with the $731 total PokerStars paid for Full Tilt. While it’s true the U.S. government’s share was only about $400 million from the Full Tilt deal it’s also true that the DoJ wanted American customers and players from around the world paid back and it wasn’t going to come from the former Full Tilt since the company was insolvent.

The source said that the talks between Scheinberg and the government were kept hush-hush and obviously could only be pursued if Obama won re-election. But now that the election is over and there has been no change in the government, the Democratic controlled DoJ can cut the deal once Congress resumes. It’s notable that Howard Lederer and Rafe Furst, both shareholders of Full Tilt who were not named in the criminal case, cut a deal with the U.S. Attorney’s Office in the Southern District of New York which saw them forfeiting millions in personal accounts as well as valuable assets to settle a civil suit against them for their involvement in Full Tilt’s ponzi scheme. Chris Ferguson is also working on a deal as is Ray Bitar although Bitar as mentioned still faces criminal charges which the government is apparently not anxious to drop.

Contact Hartley via email at Hartley[at]osga[dot]com.

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