World Cup Gamblers Cry Foul Over FBI’s Ruse in Vegas Bust

What happened at Caesars Palace in Las Vegas on the July 4 weekend might have stayed in Vegas, until a group of Asian high rollers lost their Internet connection while watching the World Cup at the casino’s ultra-luxurious villas.

Now it’s up to a federal judge to determine whether FBI agents played fair by manufacturing the disruption as a ruse to enter the villas occupied by Wei Seng Phua and fellow guests after getting a tip from hotel employees of a suspicious gambling operation there.

If Phua, a Malaysian poker player who arrived in Las Vegas from Macau in June on his $48 million private jet, can convince the Las Vegas judge that the government’s tactics violated his constitutional right to privacy, much of the evidence used to charge him and his associates may be thrown out.

When the FBI later raided the villas, agents found Phua, his son and another man with their laptops switched on to betting websites showing the live odds for World Cup games and instant messaging windows, while others in Phua’s group sat in adjacent villas amid clusters of computers and monitors and three large-screen televisions showing soccer matches.

Phua, his 22-year-old son, Darren, and six others were arrested in July, accused of operating an illegal online sports betting business. Four of the men and one woman pleaded guilty this week and agreed to forfeit about $1 million, while charges against another defendant were dropped. Phua, the alleged ringleader, and his son are set to have their first chance in court on Dec. 15 to challenge the government’s investigative methods.

Phua’s Lawyers

“This is not a close case,” Phua’s lawyers said in an Oct. 28 request to suppress the evidence the FBI collected in its searches without a warrant. The U.S. Constitution’s Fourth Amendment “establishes a process before agents may enter and search our homes, and hotel rooms.”

The Justice Department countered that it followed the law and that judges have frequently endorsed the use of trickery and deception by law enforcement to gain access to a residence where criminal activity was suspected.

The court files offer a glimpse into the rarefied world of so-called whales, “the kind of customers anyone would love to have,” according to an FBI interview with a Caesars marketing executive. The case also reveals the dark side of international sports wagering, a universe where researchers say hundreds of billions of dollars a year change hands.

Wei Seng Phua, who also goes by Paul Phua, Darren Phua, business associate Seng Chen “Richard” Yong and Yong’s son were part of a group that came to Las Vegas in June for the “One Drop” poker tournament, according to court filings.

Three Villas

Phua and Yong had negotiated a $60 million credit at Caesars Palace and they reserved three villas that normally go for $25,000 a night. The hotel provides them free of charge to patrons like Phua who gamble more than $1 million a day.

“The whole world would die for these customers,” the unidentified Caesar’s executive told the FBI. “What they say we do.”

Yong, a 57-year-old Malaysian businessman who organizes trips to bring high-rollers to the VIP rooms of casinos in Macau and elsewhere, is among those who agreed to plead guilty.

According to the U.S. Justice Department, Phua is a high-ranking member of the 14K Triad, a Hong Kong-based organized crime group.

Phua’s lawyers said the claim that he’s in a triad is “recklessly false” and based on one unsubstantiated sentence from a six-year-old report by Malaysian police, according to a court filing. The attorneys cited a report by a Hong Kong-based risk consulting firm that found “with extreme confidence” that Phua isn’t associated with the 14K Triad.

Conflicting Accounts

There are also conflicting accounts of how Phua managed to get out of Macau in June, just days after he was arrested there, along with 20 other people, for allegedly engaging in organized crime and operating an illegal sports gambling business that had handled hundreds of millions of dollars in bets on the World Cup tournament in Brazil.

Darren Phua, who was in Las Vegas at the time of his father’s arrest, contacted a man named Petros, who according to government court filings had a both a New York and a Montenegro phone number and who, via text messages, assured the younger Phua that there was no arrest warrant for his father on the Interpol system.

The elder Phua was at the time the ambassador for San Marino to Montenegro.

A few days after Phua’s arrest, Petros informed Darren Phua that he had “his friends” check out what happened in Macau and that it is a “very dirty story” and a “total set up,” according to the government’s records of the messages it found on the younger Phua’s phone.

Macau Police

“The problem is that the Chinese are very difficult and there is many centers of power sometimes in conflict between them,” Petros said to Darren Phua during the exchange. “The truth is that one center was trying to keep Paul out of this.”

Darren Phua told Petros that his father was arrested by a “friend” with the Macau police and that HK$4 million ($516,000) to HK$5 million was paid to get him released, according to the court filing.

Phua’s lawyers say there were no bribes paid to Macau police. The police issued their own denial in a statement filed in court by Phua’s attorneys.

Tom Goldstein, a lawyer for Darren Phua, said the messages between his client and Petros are just kidding and gossip, not meant to be taken seriously.

“We think the Macau investigation is definitive and speaks for itself,” Goldstein said in an e-mail. “Paul was released on bail by the courts, along with others arrested at the same time. He was in Macau for one hour and happened to come into a room that got raided.”

Casino Ledgers

At Caesars, there were a total of about 25 people in Phua’s group, according to a list of the complimentary mobile-phone numbers the hotel provided to the guests.

Yong, who organized the junket, transferred chunks of as much as $3 million of his credit to others in the group to gamble with, according to casino ledgers.

The guests had requested additional television sets and high-speed Internet connections at the villas, saying they wanted to keep up with the World Cup, according to court filings. A technician who went to one of villas to set up some of the extra equipment reported to hotel security that the suite looked like an illegal betting shop.

Caesars contacted the FBI, which together with the Internet-service provider and the hotel concocted a plan to cut off the villas’ DSL connections so that the guests would call for technical support. The plan was designed to give a pair of undercover agents access to the villas so they could secretly film what was going on with concealed cameras.

FBI Snooping

This, Phua and his son say, is against the law. The FBI shouldn’t have snooped in all three villas when it only had suspicion of illegal activity in one, defense lawyers said in a court filing. Also, without a warrant, the agents had no authority to “coerce” the guests to let them in by cutting off their Internet access, the defendants’ attorneys argued.

Because the search warrant the FBI later obtained was based on observations from the initial warrantless visit to the villas, all the evidence the government collected should be suppressed, according to the defendants.

Prosecutors maintain that because the Internet disruption only cut off DSL service to the villas, and not Wi-Fi access, the guests weren’t compelled to let the undercover agents inside, according to a Nov. 10 court filing.

“Law enforcement has long been permitted to obtain consent by posing as a confederate, business associate, or service provider,” the Justice Department said. “In fact, the government uses ruses every day in its undercover operations, and consent obtained by such ruses is valid unless the deceit leaves the occupant with no choice but to consent to an entry.”

The case is U.S. v. Phua, 14-cr-00249, U.S. District Court, District of Nevada (Las Vegas).