Magistrate Judge Recommends FBI Evidence Should Be Thrown-Out in Paul Phua Felony Case

According to a report posted today by U.S. Magistrate Judge Peggy Leen, evidence collected by FBI agents and Nevada regulatory officials violated the rights of Malaysian businessman and suspected illegal gaming operator, Paul Phua. Due to Fourth Amendment considerations, much of the evidence implicating Paul Phua and his son, Darren, has been thrown out of Phua’s trial.

Though the magistrate judge threw out the evidence, she acknowledged that her decision likely would be appealed by prosecutors. The final decision rests with U.S. District Judge Andrew Gordon, who will preside over the case if there is a trual.

Prosecutors Have 2 Weeks to Decide

U.S. Attorney Daniel Bogden said his team of prosecutors are reviewing Judge Leen’s recommendation. That recommendation was dated Friday and posted on Monday.

The government has two weeks from the time of that posting to object to Judge Keen’s report.

Caesars Palace Investigation

Leen’s report focuses on the evidence-collection practices used by FBI and Nevada Gaming Control agents in the early stages of the Paul Phua investigation. In July 2014, staff members at Caesars Palace on the Las Vegas Strip reported suspicious activity in three luxury suites at the casino-resort.

Management reported that activity to the Nevada Gaming Control Board. That information led to an investigation into the activities of the man who rented those three suites: Paul Phua. The wealthy Malaysian businessman had 7 associates with him at the time, and the men appeared to have the equipment to be running an illegal sports betting ring.

FBI Sting Operation

To get a closer look at the equipment, the FBI asked the Internet provider to provide intermittant service to Phua’s rooms. When the Malaysian men asked for technical assistance, the FBI sent some of its agents into the suite pretending to be tech support staff. In these guises, the FBI obtained enough evidence to get a warrant in the case.

The problem is, the Fourth Amendment requires law enforcement to ask a suspect’s permission to investigate their place of residence (even when rented), unless the law enforcement agents have a search warrant signed by a judge. In the Phua case, no warrant was used and permission was not asked.

FBI Legal Advisor Warned Agents

In such cases, all evidence obtained in the subsequent searches has to be thrown out of the trial. An internal FBI memo showed that at least one legal advisor warned its agents that their evidence was likely to be impermissible in court. The 4th Amendment applies to the case, even though Paul and Darren Phua are Malaysian citizens–not Americans.

Chesnoff Gives His Opinion

David Chesnoff, Thomas Goldstein, and Richard Schonfeld, the three lawyers who serve as the legal team for Paul Phua and his son, maintain that their clients did nothing wrong. Chesnoff told ABC News about the FBI procedures, “This is a complete repudiation of law enforcement officers not following the Constitution and fully informing judges of their activities. I’m sure the government recognizes that without evidence it’s hard to try cases.”

Though she did not put the matter in such stark terms, the magistrate judge in the case agreed with the essence of what Chesnoff stated. When she released her findings, Peggy Leen wrote a 32-page recommendation that Gordon dismiss evidence. In her recommendation, Judge Leen said, “A search warrant is never validated by what its execution recovers. The search warrant is fatally flawed and lacks probable cause to support the search.”

Uncertainty Surrounding Trial

Under the circumstances, it is uncertain whether the U.S. attorneys in charge of the case will continue to pursue charges. Already, 5 of the men arrested at Caesars Palace have struck plea bargains. These men received fines and were deported, in exchange for providing evidence against Paul Phua. A sixth man was determined to have had a marginal connection to the case, and received lesser charges. That leaves Paul Phua and his son.

Paul Phua is a well-connected Malaysian businessman. He has been described as a junket operator to Macau. He is a poker tournament winner and a high stakes poker player in ring games. Said to be worth $400 million, Paul Phua has been remored to operate an online sportsbook. He also was the San Marina ambassador to Montenegro for 3 years, though he is also rumored to be a member of the 14K Triad, a notorious Chinese crime syndicate.

Paul Phua’s Prior Record

What is certain is that Paul Phua has been arrested in Malaysia (2004) and Hong Kong (2014) for illegal sports betting schemes. In the first case, he paid a huge fine and left the country shortly thereafter. In the second case, Phua was deported back to Malaysia.

Despite the arrests, the Home Minister of Malaysia said Phua was not a member of a triad and would be welcomed back to his native country with open arms, when his legal troubles in the USA were over. Also, prominent members of the poker professional community, including Phil Ivey, spent over a million dollars to bail Phua out of jail. Neither this nor the $40 million private jet Phua put up for collateral for his original bail worked, because the US immigration unit–ICE–arrested Phua and put him in detention, saying he was a flight risk.