Paul Phua Sportsbetting Case – Defense Alleges Investigative Misconduct

Defense attorneys in the Paul Phua sportsbetting case have filed a motion to suppress evidence that alleges illegal behavior by federal and state investigators and at least one Caesars employee in the weeks leading up to a raid and arrest of members of an alleged boiler room betting operation being run from Caesars’ semiprivate guest villas last summer.

DOJThe case involving Phua, his son Darren, and other prominent “whales” known for their involvement in the celebrated Macau high-stakes poker games featuring many of the world’s richest players, took an abrupt turn with the filing of the latest motion.  The defense’s allegations against investigators quickly made mainstream news reports, as in their entirety the allegations, if found true, representative an excessive form of “police state” extra-legal activity far beyond the legal authority granted to investigators and other officials of United States authority.

The latest allegations also indicate a broad coverup by authorities of the real activities and long-running trampling of civil rights of the intended targets.  Among the activities are repeated warrantless searches and a complicated ruse in which FBI agents intentionally disconnected internet service to the villas and then posed as technicians in an effort to spy on the activities inside the villas, which as temporary housing are legal protected from such unauthorized searches.

The agents posing as technicians entered the villas under false pretenses and even claimed, falsely, to be fixing the high-speed internet connections; instead, the agents secretly filmed the interior of the villas — later lying to a judge in order to obtain the warrant necessary for the later raid and arrests — then spoke a code word to a waiting confederate to restore the “broken” connection from outside the villa.

The 45-page motion was filed on Tuesday by the high-powered attorneys representing some of the defendants in the case.  Listed as participating defense attorneys in the filing are David Chesnoff and Richard Schonfeld, the primary members of the Las Vegas super-firm Chesnoff and Schonfeld.  Chesnoff represents father Paul (Wei Seng) Phua, while Schonfeld represents Darren (Wai Kit) Phua.  Also contributing were defense attorneys Thomas Goldstein (also representing Darren Phua), and Michael Pancer and David T. Brown (representing another father-son pair of defendants in the case, Seng Chen “Richard” Yong and Wai Kin Yong.)

The allegations in the latest filing are extensive to the point of being far beyond full exploration in a single feature, though some mainstream outlets including Ars Technica, have filed the entirety of the defense’s motion to suppress in PDF form.  A sample video, showing one of the non-consensual villa entries conducted under the ruse of failed internet connectivity, was used as the basis for an online AP update and is now available at AP’s YouTube channel.

Among the “highlights” of the defense’s allegations within the motion to suppress:

  • At least six people participated in the extra-legal investigative scheme — three FBI agents, a state agent, a hotel investigator and a private contractor.
  • The federal agents sought an AUSA prosecutor’s approval for the scheme, were told -not- to do it, but went ahead anyway.  The same AUSA (DOJ) prosecutor later went ahead and filed the case against eight defendants anyway, despite the obvious assumption that she should have had serious doubts that the evidence in the case was obtained by legitimate means.
  • The scheme was ongoing, and was discussed at length on many occasions between the investigator-participants.  At one point, one of the agents even reminded others that the recording equipment was on, saying, “These things are still on just so you guys know,” referring to the recording devices.  Only a single slip-up on one of the tapes supplied to defense attorneys eventually clued them in as to nature of the illegal searches.
  • The agents allegedly filed false Form 302s, which are the summary documents for the various searches and contacts that took place before the raid and arrest warrants were executed in July.  Some of that documentation was included in the case as filed by the prosecution, which was duly reported on by many outlets, including here at FlushDraw.  (For example, information gleaned directly from court documents and included here may not be as it seems.  The prosecutors’ version of how they initially attempted to enter one of the villas is not only rebuffed by the defense filing, but by some of the related video evidence which has already been released to the public.)
  • The suppression of evidence supporting the defense continued even after the scheme was discovered.  At one point, the FBI sent the defendants’ attorneys two blank CDs while claiming that the surreptitious recording equipment didn’t work.
  • The FBI agents did not record their discussion with AUSA attorney Kimberly Freyn about their scheme to conduct warrantless searches under false pretenses, in which Frayn allegedly told them not to.  However, the meeting was recorded in separate Caesars documentation.
  • The FBI agents and the private contractor assisting them pre-scripted their conversations as presented on the secret recording devices, to make it appear they were conducting genuine repairs, when they knew otherwise.
  • The application for the search warrant for the villas itself includes numerous lies an omissions, designed to mislead the magistrate into signing the warrant.  (One example: the warrant application stated that the service outage was genuine, with no hint that the agents themselves had caused it.)

The 45-page motion begins with one of the most blistering statements alleging illegal government activity seen in a case in recent memory.  As taken directly from the filing’s introduction:

The next time you call for assistance because the internet service in your home is not working, the “technician” who comes to your door may actually be an undercover government agent.  He will have secretly disconnected the service, knowing that you will naturally call for help, and — when he shows up at your door, impersonating a technician — let him in.  He will walk through each room of your home, claiming to diagnose the problem.  Actually, he will be videotaping everything (and everyone) inside.  He will have no reason to suspect you have broken the law, much less probably cause to obtain a search warrant.  But that makes no difference, because by letting him in, you have “consented” to an intensive search of your home.

The next time your telephone service goes out, the “repairman” who responds may actually be an FBI agent who cut the line himself.  The next time your cable television service goes fuzzy, your plumbing backs up, or your lights go dark, caveat emptor: the source of the problem may actually be the government agent lurking in his car down the street, waiting for you to call for help — thereby unknowingly “consenting” to him using a secret camera to record you and the most private spaces in your home.

Even if you think that the next service outage in your home is real, so that an actual technician has responded, don’t be so sure.  Your consent is just as valid when the undercover agent lies to your face to falsely reassure you — even when he misleads you by holding realistic-sounding telephone calls with made-up colleagues about what is actually a non-existent problem.  So, every time any technician or service provider comes to your door, you will feel the palpable dread that by opening it you are “consenting” to the government secretly spying on you and your family — with no basis whatsoever.

Or at least this is inevitably the government’s astonishing position before this Court, because those are the appalling facts of this case.

Despite the acknowledged eloquence of the above, the overall filing does include a few free-wheeling and possibly misleading assertions of its own, as might now be expected in a case of this nature.  At one point, for instance, the filing references Paul Phua’s alleged international sportsbetting operation and possible prominence within an Asian organized-crime operation called the 14K Triad.

The latest filing notes that he was indeed arrested in Macau and “released” just prior to traveling to Las Vegas where the latest trouble occurred, though “released: may be a euphemism,  News reports from Phua’s own home-country Malaysian Times stated that Phua was quickly deported within 72 hours of his arrest, which may be a technical form of “release,” but definitely obscures the implication.

(Author’s update: A private source close to the story has asserted that Phua was indeed not deported from Macau, but was instead released on his own recognizance pending the actual trial.  Nonetheless, the initial MT report stated what was reported as above, and that minor aspect of the story remains unclear.)

Nonetheless, the latest filing in this case is a game-changer, and represents serious problems for the prosecution.  It is known whether the six people involved would face civil or criminal difficulties of their own if the allegations are found true, or if Caesars might even face the possibility of a civil lawsuit, in addition to the reputational damage now likely cause among “whales” of the international gambling scene.


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