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November 07, 2018 Practice Points

NV Court Dismisses Online Gambling Prosecution, Ruling Evidence Inadmissible

The FBI “created the need for the occupant to call for assistance from a third party by cutting off a service enjoyed by the occupant” in disconnecting a suspect’s Internet access.

By Joseph W. Martini – June 8, 2015

On June 2, 2015, the District Court for the District of Nevada dismissed charges against Wei Seng Phua, which the government had brought in connection with alleged illegal World Cup soccer gambling. Charges against Phua included transmission of wagering information in violation of 18 U.S.C. § 1084 and operating an illegal gambling business in violation of 18 U.S.C. § 1955. He faced up to seven years’ imprisonment, fines, and forfeitures of over $13,000,000.

Phua occupied a villa at Caesars Palace in Las Vegas, Nevada, where hotel employees had reportedly observed a “boiler room bookie operation.” The FBI had insufficient evidence to obtain a search warrant, so they devised a plan to obtain the necessary evidence.

In conjunction with the Nevada Gaming Control Board (NVGCB), but against the advice of the local U.S. Attorney’s Office, the FBI decided to cut off Internet service to Phua’s villa so that they could pose as repair technicians and search for evidence. This plan proved unsuccessful because no one at the villa reported an outage. The same day, however, the villa asked for a laptop to be delivered, and undercover agents made the delivery, but were intercepted by the villa’s butler. Undeterred, they entered and recorded their visit before being ushered out.

The next day, agents again cut Internet service to the villa and responded to a service call. They entered the villa and observed Phua in incriminating activities, which formed the basis for a soon-to-be-issued warrant.

The defendant filed a motion to suppress this evidence as a warrantless search, and U.S. District Judge Andrew Gordon granted the motion on April 17, 2015. The government had argued that this was a consensual encounter and there was no coercion because Internet service is not an “essential service.” In essence, the government argued that this was typical “trickery,” such as when a government agent poses as a friend or fellow criminal, or as one seeking to enter the residence to sell goods or services. The government distinguished this from improperly coercive activities, such as an agent posing as a gas-company employee and telling a homeowner that the agent must enter the residence to search for a life-threatening gas leak. The court disagreed and determined that the “[g]overnment was not just taking advantage of a fortuitous opportunity. Rather, the Government created the need for the occupant to call for assistance from a third party by cutting off a service enjoyed by the occupant.”

Following its grant of Phua’s suppression motion, the court granted another motion to suppress, making all evidence seized from Phua’s villa inadmissible. In light of this, the government conceded that it could not proceed with its case against Phua, and the court dismissed the case.

Joseph W. Martini, Wiggin and Dana LLP, Stamford, CT

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