Black Friday Rumbles: PokerStars’ Paul Tate Fined for UIGEA Violation

Updated: November 30th, 2016 by Dev Ops

The story of the April 2011 “Black Friday” criminal indictments that crippled the US-facing online world added another page last week, when the ninth of the 11 defendants, former PokerStars employee Paul Tate, was sentenced on Thursday in a US federal court.  Tate, now 42, returned to the US back in July, seeking to put the matter to rest.  The ongoing case could have caused international travel difficulties for the middle-level employee of PokerStars, who worked there from 2006-11, and who was involved solely because he inherited, among other job assignments, some of the payment-processing matters which later brought PokerStars under fire of US regulatory authorities.

doj-logoLast month, Tate pled guilty to a single count of operating an illegal gambling business in violation of the US’s Unlawful Internet Gambling Enforcement Act (UIGEA), the law which place banking-network restrictions of funds being used by US-based poker players to play on major sites.  PokerStars and other companies were shown in court submissions to have used deceptive means to hide the true nature of deposits made by US customers, in the face of overblocking by banks and credit-card funds.  The actual playing of online poker by US citizens has never been illegal (though it is in a handful of US states), and whether or not the activities of PokerStars were actually legal — or were a form of entrapment — remains an ongoing legal debate.

As for Tate, such high-minded legal concerns weren’t the issue; he just wanted to get his life back on track.  So, backed by a million-dollar bond posting and defense paid for by PokerStars’ current owners, he traveled to the US to face the Black Friday charges.  As a first-time, non-violent offender in a matter of disputed legality, Tate was widely expected to be sentenced leniently … especially since US authorities admitted that there was no active effort afoot to extradite Tate from the UK’s Isle of Man.

Indeed, on Thursday, in a sentencing hearing before US Federal Judge Lewis A. Kaplan, Tate was fined -only- $119,000.  Since he had also been living in New York City under constant monitoring of the DOJ (and likely with an electronic ankle bracelet or similar, though such details have not been released), he was building credit for “time served” without actually being imprisoned.  Specifics on the sentencing have yet to be filed, but it appears that on the prison-time considerations, Tate received that “time served” sentence, and will be free to return to the UK shortly.

Tate’s defense had already noted for the court that the sentencing range for his crime for such first-time, non-violent offenders was generally probation on up to six months in the pen, with most of such sentences trending toward no time served.  Add in Tate’s voluntary trip to the US, plus a deep log of personal references provided by business associates and family, and it was an easy choice for Judge Kaplan to free Tate and issue the relatively modest fine.  Tate had put up the significant bond and had faced up to five years in prison on the single charge to which he pled guilty.  Four other closely related counts were dismissed, as is the norm in this type of case.

As the ninth Black Friday case against individuals has now been resolved, only two at-large defendants remain: Isai Scheinberg and Scott Tom.  Scheinberg, the well-regarded co-founder of PokerStars and its parent company, then known as Rational Group, sold the entire company to Canada’s Amaya Gaming in 2014 in a $4.9 billion megadeal.  While Scheinberg still faces some financial exposure in the bizarre and ongoing action Kentucky brought against PokerStars, the wealthy Israeli national faces little immediate pressure to visit the US, even though he has been rumored at times to have been engaged in settlement talks with DOJ officials.

Then there’s the matter of Absolute Poker CEO Scott Tom, who remains in an island-sized “prison” in the Caribbean, that being Antigua.  Tom, already vilified as the thief behind the 2007 Absolute Poker cheating scandal, relocated to Antigua as AP collapsed after Friday.  Unlike PokerStars, whch issued refunds to its US-based customers, Tom and his party-hardy circle of friends, otherwise known as AP’s bosses and primary owners, looted the company, including all player deposits.  Tom was forced to flee Costa Rica soon after a raid on AP’s offices there, in which the possible capture and extradition to the US of Tom was among the scenarios.  Scott’s half-brother, Brent Beckley, was also charged on Black Friday and did, eventually, return to the US.  Beckley paid a hefty fined and served a short prison sentence in a Colorado federal penitentiary.

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