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Gaming Guru

Jeff German

Unprecedented ruse in betting scheme case debated in federal court

24 March 2015

LAS VEGAS -- Federal prosecutors and defense lawyers were in court Monday debating the validity of an FBI search warrant and an unprecedented ruse agents used to gain access to luxury Strip villas before raiding an international betting operation.

Prosecutors were trying to persuade U.S. District Judge Andrew Gordon not to accept a magistrate judge’s recommendation to toss out evidence seized at the Caesars Palace villas in July because of a flawed search warrant affidavit.

And defense lawyers wanted Gordon go against the magistrate judge’s findings that the ruse was constitutional. Agents cut Internet service to one of the three villas on July 5 and gained entry by posing as technicians working to fix the problem. They gathered evidence that was used in a sworn affidavit to get permission to later raid all three villas on July 9.

During a 90-minute hearing, Gordon acknowledged the case is precedent setting, and said he would issue a written decision.

“We’re in a new frontier. There’s no doubt about it,” he told the lawyers.

Gordon questioned where the government should “draw the line” in setting up future ruses to go after potential criminal wrongdoing.

The case involves millions of dollars in illegal wagers accepted by the betting operation on the World Cup soccer tournament last year, according to prosecutors.

Wealthy Malaysian businessman Paul Phua is the lone remaining defendant. Six other international defendants, including his son Darren Phua, pleaded guilty and left the country under terms of five years of unsupervised probation.

Prosecutors have said the illegal gambling case will be more difficult to prove without the evidence seized in the Caesars Palace raid.

Assistant U.S. Attorney Kimberly Frayn told Gordon on Monday that any misleading statements agents made in the search warrant affidavit were not intentional and not enough to warrant tossing out the evidence.

But defense lawyer Thomas Goldstein argued the warrant process was “broken from beginning to end.

“This is something that ought to worry the court,” he said. “The system does not work if the government is allowed to mislead judges.”

Defense lawyer David Chesnoff urged Gordon to send a message that “this kind of conduct is not acceptable.”

Phua, a widely known poker player, is to stand trial on illegal gambling charges before Gordon on June 1. The FBI alleges he is tied to the powerful Chinese crime syndicate known as the 14K Triad, but his lawyers have strongly denied the claim, arguing FBI agents presented flimsy evidence in court papers.

Goldstein asked Gordon to address what he called the weak 14K Triad allegations in his decision.

The betting case has attracted national and inter­national attention because of Phua’s prominence in the poker community and the ruse, which defense lawyers argued has not been used as a law enforcement tactic anywhere else in the country.

U.S. Magistrate Judge Peggy Leen has previously found that despite the deception, Phua and his son effectively consented to that July 5 visit by allowing the agents inside.

But Leen also found that the search warrant affidavit was “fatally flawed” because of several errors and lacked probable cause to justify the July 9 Caesars search. She recommended tossing out the evidence.

Leen chastised the FBI in her decision for not informing U.S. Magistrate Judge Nancy Koppe about the ruse before she approved the Caesars search. Caesars officials cooperated in the investigation, which also involved state gaming agents.