LAS VEGAS >> Federal investigators already knew about a wealthy Malaysian businessman when his $48 million Gulfstream jet touched down in neon-lit Las Vegas last June, days after his arrest and release in Macau on allegations he headed an operation that took illegal bets on World Cup soccer games.
FBI and Nevada Gaming Control Board agents believed Wei Seng “Paul” Phua was a high-ranking member of an organized crime syndicate called the 14K Triad, according to an FBI case agent’s testimony.
They thought Phua was moving his illegal Internet bet-taking operation from the Chinese gambling enclave 40 miles from Hong Kong to high-roller guest suites at Caesars Palace on the Las Vegas Strip.
But investigators couldn’t get inside the layers of security in a part of Caesars Palace usually reserved for presidents and celebrities.
Federal prosecutors in Las Vegas say they think the operation handled about $13 million in illegal bets before Phua, 50, his son, Darren Wai Kit Phua, 23, and six other people were arrested July 13.
But a judge ruled Monday that evidence seized in the case should be thrown out because it was obtained through deception — a first-of-its-kind ruse to disrupt Internet service during satellite feeds of soccer matches, then have agents pose as repair technicians to get inside.
“This case raises the difficult question of how far law enforcement … may go in engaging in deceptive conduct to gather evidence of criminal activity in places where citizens have a reasonable expectation of privacy,” U.S. Magistrate Judge Peggy Leen wrote in one of two rulings.
The agents knew several people they believed were associated with the Phuas had asked to add dedicated high-speed Internet service, additional computer equipment and extra TV monitors in the posh 8,000-square-foot villas, according to testimony.
State Gaming Control Agent Ricardo Lopez said he was sure it was an international Internet gambling boiler room.
The agents later reported to a judge that they saw Paul Phua receive a computer message saying “good luck on the hedge bet” from an illegal Asian online wagering website.
They said Darren Phua quickly switched his laptop screen from a log-in screen for an illegal sports wagering site to Google when he noticed someone was looking.
But FBI Agent Minh Pham should have reported that the reason agents knew that was because of the ruse used to get inside, the judge said.
Leen said the investigators violated the occupants’ Fourth Amendment rights when they disregarded a butler’s instructions to remain in a service pantry while delivering a laptop computer and entered other parts of the suite.
Her 32-page report, dated Friday, said the trial judge should throw out evidence obtained by deceiving the federal magistrate judge who issued the search warrant.
Leen’s other recommendation, dated Monday, was more nuanced. It said investigators didn’t violate the Phuas’ right to be free from unreasonable search, because the Phuas consented to having someone come in their hotel suite to fix an Internet outage.
Leen acknowledged that the Phuas and others in the room didn’t know the two “technicians” were FBI and Gaming Control agents wearing lapel cameras.
But, she said, “the Phuas surrendered their privacy to what they exposed to the view” of the two men invited to work in the suite.
Defense attorneys have suggested that references to the ruse were deliberately scrubbed from investigative files and FBI reports turned over to the defense. It came to light when the defense was given the lapel camera video.
The Phuas have pleaded not guilty to charges of transmission of wagering information and operating an illegal gambling business, which, combined, carry the possibility of up to 14 years in prison.
Defense attorney David Chesnoff said Monday that the entire case should be dismissed.
“This is a complete repudiation of law enforcement officers not following the Constitution and fully informing judges of their activities,” he said.
Prosecutors said they were reviewing Leen’s recommendations. The government has two weeks to object.
U.S. District Judge Andrew Gordon would make a final ruling on the evidence.
The Phuas were released after their July arrests on a combined $2.5 million bail posted by friends including poker professional Andrew Robl and 10-time World Series of Poker champion Phil Ivey.
The father and son are under house arrest in Las Vegas, wearing GPS monitors.