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PokerStars’ Mark Scheinberg Reaches $50M Settlement with US Feds

DOJLegal skirmishing between US federal authorities and people associated with PokerStars and its parent entity, Rational Group, continued this week with the announcing of a $50 million settlement between Stars scion Mark Scheinberg and the US Department of Justice.

Scheinberg, the son of PokerStars founder Isai Scheinberg (and the official head of the company after Isai stepped down last year) appears to have been targeted by the DOJ due to his own ongoing interests in PokerStars, related to the junior Scheinberg’s receipt of profits due to the PokerStars activity covered in the Black Friday indictments.

While PokerStars itself was freed from ongoing DOJ pursuit re: Black Friday in its 2012 settlement, the same wasn’t true for the junior Scheinberg, which may have created an unknown and additional complication in the recent tussle between PokerStars and the AGA in New Jersey, where Stars attempted to purchase the struggling Atlantic Club casino.  Mark Scheinberg’s name was listed as a primary officer for Rational Group US, the ownership entity that would have controlled the Atlantic Club, post-purchase.

The settlement includes evidence that a deal was being negotiated for some time, even if no formal civil charges had been filed.  From the filing:

WHEREAS, at all relevant times Mark Scheinberg was and remains a legal and/or beneficial shareholder of the PokerStars Companies and received, directly and/or indirectly, distributions from the PokerStars Companies during the time frames alleged in the Complaint (together with Mark Scheinberg’s legal and/or beneficial holdings in the PokerStars Companies, the “PokerStars Distributions,” which does not include money that the PokerStars Companies paid to any person, other than Mark Scheinberg, in his or her capacity as a shareholder or otherwise);

WHEREAS, the United States alleges (and Mark Scheinberg disputes) that the PokerStars Distributions, in whole or in part, are or may be subject to forfeiture pursuant to [the relevant forfeiture statutes];

WHEREAS, Mark Scheinberg wishes to fully and finally resolve this matter;

From there, the settlement goes on to acknowledge the “full and final” settlement amount of $50 million, which is to be paid within seven business days.  According to the filing, “Said funds shall be forfeited as a full and final settlement in lieu of the PokerStars Distributions that the Government alleges are subject to forfeiture.”

Scheinberg will be remitting the $50 million to the US Marshals Service, which generally gets to handle the money in these cases, and Scheinberg also “agrees that he shall not file any claims or petitions for remission relative to the Forfeited Funds, nor shall he assist others in filing any such claims or petitions.”

Is an extra $50 million enough to finally satisfy the US federal government’s claims against PokerStars, and get them off the back of future Rational Group / Stars attempts to reenter the States? The colder truth is despite more than three-fourths of a billion in settlements (including money designated to go to former US Full Tilt players, whose wait now exceeds two years), all the federal stuff still amounts to only half of the legal pie: Each and every one of the United States’ 50 individual states could still seek to wrest its own settlement from the company, as a back-tax fee of sorts… or a future cost of doing business.

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