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Jeff German

Feds obtain new gambling indictment against Malaysian businessman

14 May 2015

Undaunted by a judicial order tossing out key evidence, federal prosecutors on Wednesday obtained a new indictment in their illegal gambling case against wealthy Malaysian businessman Paul Phua.

The new indictment adds a conspiracy charge against Phua to the previous felony counts of operating an illegal gambling business and transmission of wagering information.

Phua, 50, who is free on his own recognizance, has been summoned to appear in court on May 20.

“A conspiracy charge is the darling of a prosecutor’s nursery,” defense lawyer David Chesnoff said Wednesday. “Mr. Phua maintains his innocence. You cannot be guilty of conspiracy if you never agreed to do anything that’s illegal.”

The charges stem from an FBI-led raid July 9 at three luxury Caesars Palace villas used in what authorities said was a worldwide multimillion-dollar betting operation.

Phua, a Strip high roller and poker player worth hundreds of millions of dollars, was among eight defendants from Malaysia and China charged in the high-tech betting scheme alleged to have accepted illegal wagers on last year’s World Cup in Brazil.

Six defendants, including Phua’s son Darren, pleaded guilty and were each fined and sentenced to five years of probation with the condition they stay out of the United States during that period. The case against a seventh defendant was dismissed.

Last month, U.S. District Judge Andrew Gordon ruled that FBI agents violated Phua’s privacy rights when they entered his Caesars Palace villa posing as repairmen to secretly gather evidence days before conducting the raid.

Gordon said the unprecedented ruse took away Phua’s Fourth Amendment rights to be free from “unreasonable” searches and seizures, and the judge barred prosecutors from using any evidence agents obtained as a result of it.

Gordon also upheld a federal magistrate judge’s recommendation tossing out evidence obtained from Phua’s villa during the raid because of mis­representations and omissions agents made in a search warrant affidavit seeking permission to raid the betting operation.

The prosecutors are still free to use evidence seized in the other two villas. One of the villas was operating as a boiler room betting operation with an array of computers and television monitors set up to handle the action, prosecutors alleged.

In court papers, an FBI gambling expert who analyzed the mass of confiscated evidence described the betting scheme as a “sophisticated, global operation,” with business teams in Las Vegas and overseas in Manila, the Philippines. Each team had specific duties in the operation, which maintained accounts with a number of prominent bettors worldwide and made use of major Internet betting sites.

The evidence taken from the other villas is “more than sufficient to sustain” Phua’s conviction at trial, prosecutors wrote in court documents filed this week.

“The evidence demonstrates the defendant did much more than just place bets,” prosecutors added. “Rather, the defendant maintained a leadership role in the illegal betting operation.”

According to the indictment, the scheme was carried out by Phua and his co-conspirators between at least June 6 and July 9. More than $50 million in credit was obtained from Caesars Palace, which cooperated in the federal investigation.

From cellphones and electronic equipment installed at the villas, illegal bets were placed during this time over the Internet on World Cup soccer games, the indictment alleges.

Prosecutors are seeking to recover $13 million in profits the betting operation earned while operating clandestinely at Caesars Palace, according to the indictment.

The new conspiracy charge is seen as making it easier for prosecutors to tie Phua to the seized evidence still in play at the two villas not occupied by him, as the case proceeds to a trial on June 1.

Defense lawyers, however, have filed new motions seeking to bar the government from using that evidence.

The betting case attracted national and inter­national attention because of an unprecedented ruse and Phua’s prominence in the worldwide poker community. Professional poker champion Phil Ivey helped put up his bail.

In previous court documents, FBI agents and prosecutors alleged Phua was a member of an Asian organized crime syndicate, but defense lawyers strongly denied the allegation and attacked the government for providing what they called flimsy evidence of the connection.

Prosecutors reasserted that claim in their latest court papers, but did not provide any additional evidence.