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Gaming Guru

Jeff German

Judge throws out evidence in Phua illegal gambling case

27 May 2015

A federal judge Tuesday tossed out the remaining evidence in an illegal gambling case against wealthy Malaysian businessman Paul Phua because of government misconduct.

Following a two-hour hearing, U.S. District Judge Andrew Gordon issued a ruling from the bench that essentially gutted the government’s case.

Gordon, who promised a written decision, gave federal prosecutors until noon Friday to disclose whether they will drop conspiracy and illegal gambling charges against Phua, who is supposed to stand trial June 15. Gordon set a status check in the case for Monday.

U.S. Attorney Daniel Bogden could not be reached for comment. But Assistant U.S. Attorney Cristina Silva, one of three prosecutors assigned to the case, said in court that the government wants to see Gordon’s written order before deciding.

Afterward, defense lawyer David Chesnoff said Gordon’s ruling means prosecutors are now barred from using evidence FBI agents seized from three Caesars Palace villas during a July 9 raid.

“This squarely sends the message that illegal searches will not be tolerated in the district of Nevada,” Chesnoff said.

At the time of the raid, the FBI was investigating a multimillion-dollar betting operation said to have accepted illegal wagers on the World Cup soccer tournament in Brazil.

Prosecutors still have the option of asking Gordon to reconsider his decision or ask the U.S. 9th Circuit Court of Appeals in San Francisco to overturn Gordon and keep the high-profile case alive.

Last month, Gordon ruled that FBI agents violated Phua’s privacy rights when they entered his Caesars Palace villa posing as Internet repairmen to secretly gather evidence days before conducting the raid. He prohibited prosecutors from using any evidence agents obtained through the unprecedented ruse.

Gordon also tossed out evidence agents obtained from Phua’s villa during the raid because of misrepresentations and omissions agents made in a search warrant affidavit seeking permission to search the villa.

Defense lawyers, citing the legal doctrine “fruit of a poisoned tree,” then sought to bar prosecutors from using evidence seized from the other two villas. One of the villas was alleged to have been operating as a boiler room betting operation with an array of computers and television monitors set up to handle the action.

Chesnoff, Thomas Goldstein and Richard Schonfeld argued that without evidence obtained through the ruse, agents would not have had enough probable cause to persuade a judge to authorize search warrants.

Silva and Assistant U.S. Attorney Phillip Smith Jr. contended Tuesday that the government would have sought the villa search warrants in any event.

Gordon said the prosecutors did not provide him with evidence to support their position.

Goldstein told Gordon in court that the government had played “fast-and-loose with the facts” during the investigation and committed “outrageous constitutional violations.”

Phua, 51, a Strip high roller and poker player worth hundreds of millions of dollars, was among eight defendants from Malaysia and China charged in the international betting scheme.

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.

Earlier this month, prosecutors filed a new indictment against Phua. The indictment added the conspiracy charge to make it easier to tie Phua to the evidence seized from the two villas not occupied by him.

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 alleged.

Prosecutors contend the betting operation earned $13 million in profits while operating clandestinely at Caesars Palace.

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