Procedural errors may kill FBI gambling case involving Asian kingpin Paul Phua

Phua - called by US federal agents a high-ranking member of Hong Kong's 14K triad society - and his son Darren Phua Wai-kit face two charges of operating an illegal gambling ring in Nevada, after they were arrested for allegedly handling bets on Asian gambling websites during the soccer World Cup earlier this year.

Prosecutors now have to prove that the two Malaysian citizens not only used such betting platforms during their stay in Las Vegas, but also operated them from there.

Phua "absolutely maintains he is innocent of the gambling charges in the United States", lawyers for the 50 year-old said in an email. They also called the triad allegations unfounded.

In a move to thwart the charges, the lawyers are now trying to suppress statements Phua and his son gave in which both said Paul Phua held a stake in IBC Bet, an online betting provider in the Philippines that industry insiders consider to be one of the largest in the world.

Police failed to give a so-called Miranda warning to father and son, violating their constitutional rights, the lawyers argue. The warning informs suspects that they have the right to remain silent when interrogated by law enforcement officers and to seek legal advice before answering questions.

The two Malaysians were staying at a villa in Las Vegas offered to them free of charge by Caesars Palace Hotel, when federal police officers executed a search warrant on July 9, according to Paul Phua's own account deposited in Nevada court documents.

"The first agent I saw pointed a machine gun at me and shouted, 'Put your f*ing hands up'," Phua writes in his affidavit. "Everyone in the villa was handcuffed, herded into the dining room, and told to get on our knees and face the wall."

Officers interrogated him for three hours, he wrote, adding that he was then kept handcuffed for another two hours. "I remained handcuffed until the agents left the villa," Paul Phua wrote.

His son was also told to kneel down and was handcuffed. The two men were formally arrested days later.

FBI officers in their records stated that Paul Phua "was advised that agents were executing a search warrant, he was not under arrest, the interview was voluntary, he could refuse to answer questions, and he could stop the interview at any time."

The FBI office in Las Vegas referred questions to the local US Attorneys Office, which did not reply to a written request for comment.

The statements the two men gave to federal agents during the raid could be crucial to the prosecutors' case against them as they tie Paul Phua to IBC Bet.

According to FBI interview records, Paul Phua at one point during his interrogation said he had invested approximately US$200 million in IBC. Later in the same interview he said his stake in IBC stood at HK$2 million.

Registered in the Philippines, the platform takes more than US$2 billion in wagers every week, Chris Eaton, the executive director for integrity with the International Centre for Sport Security and former Fifa head of security estimated in an earlier interview with the South China Morning Post.

Several arrests of illegal bookmakers in Southeast Asia prior to the World Cup have pointed to IBC.

A Post investigation in September shed some light into the operations of Asian online betting websites, but ownership of online gambling platforms like IBC is often obscured in complex networks of offshore companies.

Phua told FBI agents that he had "wagered between US$200 million and US$300 million in Hong Kong dollars since the World Cup started, but he stopped betting when he arrived in the US."

His son Darren reportedly said "he knew his dad owns the IBC website when he was 19 or 20 years old," according to his interrogation record. The son's computer was connected to the betting platform at the time of the raid, according to FBI records.

Darren Phua said he did not know online betting with foreign operators was illegal in Nevada.

Defence lawyers argue that both father and son answered agents' questions without being told they had the right to remain silent and seek legal advice.

"At no point did I feel that I was free to stop answering the agents' questions and terminate the interview, nor did I ever feel that I was free to leave," wrote Paul Phua.

It is the second motion Paul Phua's lawyers have filed to suppress evidence gathered in the FBI operation. In a first motion, they argued that federal agents had illegally obtained evidence by shutting down the internet in the villa and impersonating repairmen.

"The agents were aggressive in the way they went about their business in this case," said Gregory Gordon, an associate law professor at Chinese University and former US federal prosecutor.

"Based on what is alleged by the defendants in the motion, there is a good chance the non-Mirandised statements are going to be suppressed. That said, it may come down to a witness-credibility determination at the hearing."

The Phuas are represented by a high-profile team of lawyers, which include David Chesnoff, who counts socialite Paris Hilton, boxing legend Mike Tyson and members of the Hells Angels gang among his former clients.

Phua had already been arrested in June during a raid on an alleged illegal bookmaking operation at the Wynn Hotel in Macau.

The one-time leading junket operator in the territory posted bail and left for the US. “The police in Macau is building a case against him,” the FBI transcript reads. Macau's judicial police did not respond to a request for comment.

Additional reporting by Raquel Carvalho