A federal magistrate is tossing a Las Vegas search warrant that led to the arrest of as many as eight people accused of running an illegal, online bookmaking operation last year from posh villas at Caesar's Palace. The court found that the Federal Bureau of Investigation's warrant application was "fatally flawed" and was "supplemented with material omissions."

To obtain a search warrant, the authorities cut DSL access and posed as the cable guy, gathering evidence along the way that made up the basis for the bulk of a search warrant that resulted in the arrest of high-stakes gambler Paul Phua, his son Darren, and others.

Magistrate Judge Peggy Leen ruled that the failure to mention that the original case was born from the "ruse" meant the judge who signed a search warrant this summer didn't have all of the facts. Nowhere in the search warrant request, however, did the authorities mention that they allegedly saw illegal wagering on computers after posing as technicians who in reality briefly disconnected the DSL.

"The investigators' suspicions that Phua was engaged in illegal sports betting at Caesars Palace may be borne out by the evidence recovered in the execution of the warrant," Magistrate Judge Peggy Leen ruled "However, a search warrant is never validated by what its execution recovers."

The magistrate's decision is not final and must be approved by a district court judge. The government alleges that the elder Phua, who is a 50-year-old Malaysian, is a "high-ranking member" (PDF) of the 14K Triad specializing in loan sharking, illegal gambling, prostitution, and drug trafficking—an allegation he denies.

The other defendants have reached misdemeanor plea deals. The father and son did not reach a plea deal.

Consent "obtained by ruse"

While the ruling may ultimately doom the prosecution, a separate ruling Monday from Magistrate Leen might bolster the government's ability to gain access to property while posing as the cable guy.

Recall that the authorities built, in part, their case for a search warrant [PDF] by turning off Internet access in three villas shared by the eight individuals arrested. At various points, an agent of the FBI and a Nevada gaming official posed as cable technicians, secretly filming while gathering evidence of what they allege was a bookmaking ring where "hundreds of millions of dollars in illegal bets" on World Cup soccer were taking place.

The investigation began this summer when the defendants started requesting a substantial amount of electronic equipment and Internet connections from Caesars Palace staff, the government said. A technician was suspicious and alerted casino security that a bookmaking operation might be underway, the government said in court papers.

When responding to a defense challenge, Magistrate Leen ruled that the authorities did not breach the Phuas' constitutional rights because they granted the agents consent to come into the villa even though "their consent was obtained by ruse."

"The agents did not exceed the scope of the consent they were given when they were admitted posing as technicians to repair a DSL disruption they created as a ruse to obtain entry," Leen ruled.

That was also the position the government had taken.

The government provided the Las Vegas judge presiding over the case with a laundry list of legal precedent in which the government employed a ruse to gain access to a dwelling. In 1966, the Supreme Court said it was OK for an agent to pretend to be a drug buyer to get inside a home. In 1980, the courts upheld an agent posing as a drug dealer's chauffeur. In 1982, an agent posed as the cousin of an informant to get inside a suspect's residence. In 1987, government agents posing as real estate investors accessed a suspect's bedroom and closet. In 1989, an undercover officer posed as a UPS delivery man to get inside a home suspected of manufacturing methamphetamine.

Like the magistrate's other ruling, Leen's decision is a recommendation to a district court judge and not final.