Judge to Order Partial Suppression of Evidence in Paul Phua Sportsbook Trial

The complicated Paul Phua case involving allegations of operating a boiler-room bookmaking operation from private villas at Caesars Palace has undergone another series of developments, with presiding federal magistrate in the process of issuing an order that will suppress some of the evidence in the case.

scales-justicePaul Phua and his son, Darren, are the final two of eight defendants in the high-profile case.  At the heart of the legal battle is the complicated ruse state and federal investigators used to obtain access to three separate villas at Caesars last July, including that of the Phuas, looking for evidence in a weeks-long investigation.

Five of the six other defendants in the case pled guilty, paid hefty fines, and were deported, while charges against the sixth were dropped.  The Phuas themselves are central figures in the celebrated high-stakes poker cash games of recent years, that have drawn the best and richest players from around the globe.  High-stakes pros such as Phil Ivey, Andrew Robl and Tom Dwan even put out bail money and provided housing for the Phuas following their arrest.

As background, the Phuas, father and son, occupied a separate Caesars villa from that where the heart of the boiler-room operation, but were targeted by the investigators and by Caesars security because of their association with the other defendants, plus Paul Phua’s arrest in Macau earlier last year on similar charges.

Nonetheless, the efforts to tie Paul and Darren Phua to the case involved extreme deception by the investigators, with federal magistrate Peggy Leen set to rule that at least part of the searches conducted by authorities violated the Phuas’ Fourth Amendment rights.

Following several rounds of defense motions, a volley of government and defense responses and arguments and four days of witness hearings in December, Judge Leen has sifted through the complicated case.  In an opinion dated February 2nd, Leen wrote that evidence obtained during an initial visit on July 4th to Paul Phua’s Villa 8882 must be suppressed, while evidence obtained on a follow-up visit, on July 5th, may still be permissible.

On July 4th, the agents posed as technicians while visiting Paul Phua’s villa to deliver a new laptop.  It was on this visit that Judge Leen found that the agents willfully violated the Phuas’ Fourth Amendment rights by refusing to adhere to a butler’s order to remain in the villa’s pantry.  Instead, the agents entered the heart of the villa and secretly filmed the activities that they found.

As Leen wrote, “[Agents] exceeded the scope of the consent to enter when they left the butler’s pantry area and entered the interior of the villa against the butler’s clear instructions. As a result, evidence derived from entering the interior of the villa on July 4, 2014, should be suppressed.”

The July 5th visit, however, was curiously upheld, even though the lines of evidence may still result in some of that evidence being suppressed as well.  This second visit was where two FBI agents posed as service technicians, purportedly coming to the Phuas’ villa in order to “fix” broken internet service, which the FBI and Caesars staff had intentionally disabled.  Judge Leen’s split decision means that evidence from the Phuas’ villa that was seen for the first time on the agents’ July 5th visit, may still be introduced into the case.

In regards to this second visit, Judge Leen wrote, “The court also finds the Phuas consented to the warrantless entry on July 5, 2014, although their consent was obtained by ruse. The agents did not exceed the scope of the consent they were given when they were admitted posing as technicians to repair a DSL disruption they created as a ruse to obtain entry.

The case pushes the very boundaries of the protections that the Fourth Amendment is designed to provide.  Here’s the careful path that Judge Leen drew to allow some of the evidence obtained to remain in play:

The court finds that the occupants of villa 8882 (the Phuas) requested restoration of the DSL service and consented to the entry of [FBI agents] Lopez and Kung posing as technicians there to restore the DSL service. The occupants were deceived about a number of things. The occupants were not informed that the government disrupted the DSL service. The occupants were not informed that the DSL service was disconnected from a room outside the villa and could be restored from the same location. The occupants were not told that Lopez and Kung were special agents posing as DSL technicians. However, under the totality of the circumstances present here, the court finds the deception did not deprive the occupants of a free and uncoerced choice. To be sure, the occupants would not have consented to allowing Kung and Lopez into the villa if they had known they were law enforcement officers. However, the same can be said about every undercover operation. The Fourth Amendment does not protect the occupants’ misplaced confidence that the agents, posing as technicians, would not reveal what they saw in the areas they were granted access to carry out their ruse.

The ruse that was used here was not based on a health or safety issue in which the occupants would feel they had no choice but to allow entry or risk an imminent life-threatening emergency. The occupants’ consent was not vitiated merely because they would not have given consent to enter the villa, but for the non-disclosures and affirmative misrepresentations which were made.

In this case, the Phuas surrendered their privacy to what they exposed to the view of Lopez and Kung when they admitted them to fix the fake DSL disruption. The Phuas wanted the DSL to work. They were willing to admit technicians to fix the problem. They allowed the agents to go where they thought the agents needed to go to fix the problem. They were tricked. But, they assumed the risk that Kung and Lopez would see what the Phuas exposed to view when they admitted Kung and Lopez, dressed as technicians, into the villa. 

One of the factors in play as reasoned by Judge Leen was that Internet service was not a life “necessity,” and that the Phuas had other available options, even if not of the high-speed, DSL access to the Internet that they desired.

An interesting sideline to the above is that the agents also devised a plan to cut off all cable service to the three villas involved in the investigation, including the one occupied by the Phuas.  However, that plan was abandoned after federal attorneys refused to provide Caesars’ management with assurances that they would not face personal of corporate liability.

As Leen summarized:

The plan to disrupt cable service to generate a call for service was abandoned because Caesars engineers and Wood concluded it was not feasible. Disruption of the cable was not feasible primarily because it could not be done surreptitiously and it was not possible to disrupt cable to the villas under investigation without disrupting cable service to the other guests.

Additionally, the court finds that Caesars was unwilling to disrupt cable service to villa guests without assurances on behalf of the government that Caesars would not be found responsible or liable. The assigned AUSA refused to provide any assurances, and in fact, even declined to talk with Caesars’ lawyer about the proposal to disconnect cable service. The inference the court draws from these findings is that government counsel did not want Caesars to be able to claim that it relied, in any way, on advice from counsel for the government in deciding whether or not to disrupt cable service.

Both sides in the case are able to claim a victory of sorts from Judge Leen’s split ruling, with more hearings and motions already in the process of being heard.  The Phuas’ powerful attorneys, including David Chesnoff, Thomas Goldstein and Richard Schonfeld, are battling to extract the complete investigatory trail compiled by investigators and prosecutors in the case, which the government has resisted providing in its entirety.  These ongoing evidentiary battles will continue for several more weeks or months before the case goes to trial, which is scheduled for later this spring.


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