Aug. 5 (Bloomberg) -- When FBI agents went into Villa 8882 at Caesars Palace in Las Vegas on the afternoon of July 9, they found Wei Seng Phua and his son watching the World Cup semifinal between the Netherlands and Argentina.
Phua, a regular at the Poker King Club in Macau where seven-figure pots are common, had flown in from the former Portuguese colony on his private jet two weeks earlier. He travels on a diplomatic passport from San Marino, hobnobs with the world’s top professional poker players, and according to the FBI, he’s a high-ranking member of a Hong Kong-based triad.
When the FBI entered their villa, the father and son and a third man had their laptops switched on to betting websites showing the live odds for the game and instant messaging windows. In two of the hotel’s adjacent villas, which rent for a minimum of $25,000 a night, investigators discovered other members of Phua’s group amid clusters of computers and monitors and three large-screen televisions showing soccer games.
During the Federal Bureau of Investigation raid, a woman working on a laptop was ordered to put her hands up. She raised one hand and continued typing on a betting website with the other, according to a criminal complaint filed by the U.S.
Phua, 50, a Malaysian citizen who also goes by Paul Phua, and his son appeared today in federal court in Las Vegas and pleaded not guilty to charges they ran an illegal gambling business out of the Caesars Palace villas. Phua and his associates, six of whom are set to be arraigned Aug. 7, were using the SBOBet and IBCBet sports betting websites, neither of which is licensed to operate in Nevada, to monitor odds and place bets, according to federal prosecutors.
Those are the two biggest online sport betting commission businesses in the world, according to Chris Eaton, former head of security at soccer’s governing body FIFA. Eaton, now a director at Doha, Qatar-based International Centre for Sport Security, estimated that each company turns over about $2 billion a week.
Of more than 8,000 operators offering sports betting worldwide, most do so without obtaining authorizations required in the countries where their clients are located, making about 80 percent of all sports bets illegal, according to a May 2014 report by the Sorbonne University and International Centre for Sport Security.
David Chesnoff, Phua’s lawyer, after today’s hearing that “an indictment is just an allegation and we adamantly maintain our innocence.”
Phua and his son, Darren, are out on bail after two professional poker players posted $2.5 million in cash bonds and Phua’s $48-million Gulfstream G550 was secured as collateral. The poker players, Andrew Robl and Phil Ivey, who has won 10 World Series of Poker bracelets, are friends of Phua, Chesnoff said last week.
Phua’s lawyer described him as an “entrepreneur.” The Justice Department said in a court filing that he’s a high-ranking member of an Asian organized-crime group, the 14K Triad. Triads are involved in the illegal drug trade, money laundering, illegal gambling and extortion rackets.
Chesnoff denied the allegation, saying he wasn’t going “to dignify it with a response,” and said his client was a “complete gentleman.”
Phua at one point provided so-called junket services to the Macau subsidiary of Las Vegas Sands Corp. He was the owner of Sat Ieng, a licensed operator that brought high rollers to the casino’s VIP rooms in exchange for a share of the turnover, according to a 2006 filing by Teem Foundation Group Ltd., a Hong Kong company that invested in Phua’s business.
When he was arrested last month, Phua told federal agents he was betting on the World Cup through someone in the Philippines named “Foo.” He also told them he has invested $200 million in the IBC website and that he had bet “between $200 million and $300 million in Hong Kong money” since arriving at Villa 8882 on June 23, according to the complaint. In a separate interview, Darren Phua said his father owns IBC.
The FBI raid in Las Vegas wasn’t the Phua’s first run-in with law enforcement over alleged World Cup betting.
He was arrested in June in Macau, together more than 20 other people, for operating an illegal sports book gambling business, U.S. prosecutors said. Phua and his associates handled “hundreds of millions of dollars” in illegal bets on World Cup games, the government said.
After his June 18 arrest, Phua posted bail in Macau and flew to Las Vegas on his private plane. He has a diplomatic passport from the Republic of San Marino, for which he is the ambassador to Montenegro, according to a July 14 court filing by his lawyer.
Phua and his associates from Malaysia, China and Hong Kong already had set up shop in Caesars Palace by then, according to U.S. prosecutors. They had rented Villas 8881, 8882 and 8888 earlier in June. The number 8 is a lucky number in Chinese culture and the tail number of Phua’s Gulfstream is N888XS, according to the complaint.
The group aroused suspicion when they asked for an unusually large amount of electronic equipment and technical support, according to court documents. After casino electrical engineers had gone into one of the villas to set up equipment, they told security that it looked like an illegal gambling operation, with computers displaying betting odds similar to the screens at the casino’s sports book.
An undercover FBI agent went along with an IT technician to Villa 8882, the one occupied by Phua, on July 4 to set up a new laptop computer. The butler, also a hotel employee, refused to let them enter beyond the pantry, saying the guests didn’t want anyone to “see their business,” according to the criminal complaint.
The following day, two undercover FBI agents went to the villa, after an urgent request for help with the DSL connection right before the Belgium vs. Argentina game, and saw Phua clicking on the odds shown on the SBOBet site, which is licensed in Asia and Europe but not in the U.S.
In a search of his laptop after the raid, the FBI found a message from someone using name “byronchia” to Phua that said “Hi Boss.” It listed what agents calculated was a grand total of HK$2.75 billion ($357 million) in gambling for the World Cup through July 5, according to the criminal complaint.
Phua wasn’t immediately taken into custody after July 9 raid. He was arrested four days later in the lobby of the Palazzo hotel even though he had agreed to surrender, according to the July 14 filing by his lawyer.
Phua and his associates face as long as five years in prison if convicted of running an illicit gambling business and two years for unlawful transmission of wagering information, according to the U.S.
Gary Thompson, a spokesman for Caesars Entertainment Inc., declined to comment on the alleged gambling hub at the villas, which the government said was set up without the consent of the casino.
SBOBet said in a July 17 statement that neither Phua or the other defendants have any association with the ownership or management of the company. The company also said it doesn’t accept bets from the U.S. and that any alleged wagers placed by the accused on its site “could only have been made illegally.”
Representatives of Firstright Developments Ltd., a Philippine company that owns IBCBet according to its website, didn’t immediately respond to an e-mail seeking comment on Phua’s involvement with IBCBet and his alleged use of the website in Las Vegas.
The case is U.S. v. Phua, 14-cr-00249, U.S. District Court, District of Nevada (Las Vegas).
To contact the editors responsible for this story: Michael Hytha at firstname.lastname@example.org Peter Blumberg, Charles Carter