Paul Phua and Straughn Gorman would appear to have little in common.
When last seen Phua was departing Las Vegas in his $48 million Gulfstream. He’s a Malaysian businessman and high-rolling gambler with reputed ties to a Hong Kong criminal triad. Phua has denied any criminal associations, and his defense attorney David Chesnoff calls such assertions “garbage.”
Gorman, meanwhile, presumably left Nevada from behind the wheel of his ransacked recreational vehicle. He lists a Hawaii beach shop as his place of employment, but authorities suspect he also traffics marijuana. All it lacks is evidence.
Against formidable odds, both men managed to beat the House in Nevada in two high-profile federal cases that now have prosecutors and law enforcement feeling a little heat—over searches for drugs and dirty money that judges say never should have happened.
Phua was the alleged ringleader of a World Cup soccer betting operation that in 2014 half-cleverly set up shop in the high-roller villas at Caesars Palace when the FBI and Nevada gaming authorities came calling.
In the ensuing months, the government linked Phua and the betting ring to Wo Hop To gang leader Cheung Chi-tai, whose violent reputation and connection to Macau’s lucrative VIP gambling salons menaces more than one Nevada gaming corporation these days.
Cheung was identified in a 1992 U.S. Senate Permanent Subcommittee on Investigations as one of nine Wo Hop To leaders. Cheung was linked to (but not charged with) a vicious beating of a Macau casino dealer in 2011. One of his associates was charged and convicted in the assault.
A passport with Cheung’s name on it was recovered during the search of the high-roller villas.
But as it turns out law enforcement’s investigation of the betting ring was also too clever by half. Cops cut off the Internet service to the Phua group’s villas, then sent in FBI agents disguised as technicians to scout the premises—in effect to gather evidence without a warrant for their case.
What investigators saw resembled a standard sports betting “wire room” replete with eight computers and 20 monitors. Phua’s operation was said to have handled approximately $13 million in illegal bets before the FBI came calling on July 13 of last year.
During the preliminary phase, U.S. Magistrate Judge Peggy Leen called the law enforcement investigation strategy “fatally flawed” and questioned whether the government had probable cause before seeking a search warrant. She also determined material statements made by FBI agents in the case were “false and misleading.”
Although six of eight suspects pleaded guilty to dramatically reduced charges and received probation, Phua pressed his bet. Represented by veteran defense attorneys Chesnoff and Tom Goldstein, Phua watched as much of the evidence against him was thrown out by U.S. District Judge Andre Gordon.
“Permitting the government to create the need for the occupant to invite a third party into his or her home would effectively allow the government to conduct warrantless searches of the vast majority of residences and hotel rooms in America," Gordon said during an evidentiary hearing.
On June 1, Gordon dismissed the case. Another month passed before U.S. Attorney Daniel Bogden said his office disagreed with Gordon’s legal reasoning, but it declined to appeal the case.
Then there’s Gorman, who has no criminal record but found himself stopped twice on the same day in January 2013 outside of Elko, a town in northern Nevada. He was pulled over the first time by a Nevada Highway Patrol trooper for driving too slowly in the fast lane of Interstate 80. The trooper was suspicious of Gorman, but lacked the probable cause to search his RV. He couldn’t detain Gorman long enough to fetch a drug-sniffing dog.
So he let Gorman go—and radioed ahead to an Elko County sheriff’s deputy. Accompanied by a trained canine, the deputy stopped Gorman a second time. Although Fido supposedly whiffed something, a follow-up found $167,000 in cash hidden in the RV, but not a pinch of sinsemilla.
Once seized, the Nevada U.S. Attorney’s office immediately began the process of civil forfeiture. The two stops were obviously related, but the prosecutors failed to make that distinction in their pleadings before the court. Senior U.S. District Judge Larry Hicks ripped into the government in dismissing the forfeiture action on June 12, and noted that Gorman was entitled to seek his attorney’s fees.
“The court expects and relies upon the United States attorney’s office to be candid and forthcoming with material information uniquely held only in possession of the government and clearly relevant to central issues before the court,” Hicks wrote. “That did not occur here.”
Gorman’s attorney, Vince Savarese, is a veteran of many battles in civil forfeiture cases against the government.
“These guys have a personal financial incentive to shake down as many vehicles as possible,” Savarese said, alluding to the U.S. Department of Justice’s controversial Equitable Sharing Program. “They had no reasonable suspicion to stop my client.”
DOJ statistics report more than $4.5 billion in forfeited assets have been shared with more than 8,000 state and local law enforcement agencies in what it calls “one of the most important provisions of asset forfeiture.” The Washington Post reported in January that law enforcement has made more than 55,000 seizures worth in excess of $3 billion since 2008.
“The U.S. Attorney was not candid with the court on the facts of the case,” Savarese said. “The back end of the decision is devoted to chastising the government as to how they handled this thing in court. We had to go through the process, by the numbers, to prove everything. They weren’t willing to acknowledge anything—even though they knew this was something that could never be hidden.”
Former Nevada ACLU counsel Allen Lichtenstein, who has monitored forfeiture cases in the state for many years, said the judge’s expressed ire ought to send a message to law enforcement and federal prosecutors.
“As far as forfeiture goes, this is nationwide,” Lichtenstein said. “This has been going on for decades. Part of the problem is the law lets you eat what you catch. It’s ripe corruption, and it is ripe for overzealous prosecution. It’s a system where it’s about money and not about justice.”
The pair of recent legal setbacks proved that the house doesn’t always win in the Nevada justice system—as long as the players have the money to fight.
“I guess what I’m most pleased about is that the federal judges, when presented with evidence of law enforcement not telling the straight story, called them on it,” Phua attorney Chesnoff said. “That kind of judicial courage puts teeth in the Constitution.”
