Caesars Palace Not Held to Same Standard Lavabit Is

I’m going to have a longer post about this opinion recommending a judge throw out the warrant, based on evidence FBI obtained by shutting down DSL and then pretending to be the cable guys that would fix it, used in bust Paul Phua (see this article for more).

But I want to point to the excuse FBI Agent Minh Pham used to explain away several other errors he made in the search warrant:

After Pham submitted and obtained the search warrant, he learned the affidavit contained errors. Specifically, it stated that Paul Phua wired $4 million into a Caesars account to secure a credit line. Pham later discovered it was actually Seng Chen “Richard” Yong that requested the wire to secure both their lines of credit. However, at the time Pham submitted the search warrant affidavit, he believed it was correct that Paul Phua had initiated this transfer.

The affidavit also stated Paul Phua had transferred approximately $900,000 from a casino in Fort Lauderdale, Florida, to the Caesars account. However, Pham later learned that Paul Phua had been only one of the individuals who signed the consent to have that money wire-transferred into Yong’s account. At the time Pham submitted the affidavit, he believed the statement was true based on documents from Caesars concerning monetary transfers that he had received. Pham referred to the spreadsheet contained in government’s Exhibit 2F as a document he relied upon to support his statement in the affidavit. The font size was very small and difficult to read.

He also discovered another error in the affidavit days later. There were transfers for $3 million between individuals in the villas. He looked at the spreadsheet, and it was off by one or two lines,” which caused him to associate the wrong name with the transfer. [my emphasis]

The font on the spreadsheet Caesars Palace had given the FBI when it requested they open an investigation was “very small difficult to read.”

You’ll recall that when the FBI went after Lavabit to get its crypto key, Lavar Levison tried to comply by providing a printout of the key. But the government complained it was illegible, and got Levison held in contempt.

In an interesting work-around, Levison complied the next day by turning over the private SSL keys as an 11 page printout in 4-point type. The government, not unreasonably, called the printout “illegible.”

“To make use of these keys, the FBI would have to manually input all 2,560 characters, and one incorrect keystroke in this laborious process would render the FBI collection system incapable of collecting decrypted data,” prosecutors wrote.

The court ordered Levison to provide a more useful electronic copy. By August 5, Lavabit was still resisting the order, and the judge ordered that Levison would be fined $5,000 a day beginning August 6 until he handed over electronic copies of the keys.

Apparently, huge casinos are held to a different standard than small email providers.


8 replies
  1. TomVet says:

    Well of course they are. Everyone knows that large casinos are not takers – Ha! They make the lives of everyone who visits so much better, especially when they invite the Feds in to help them enjoy their stay.

  2. bloopie2 says:

    Well of course they are. Especially when they are not the target. People USE intermediaries to get to their eventual “ends”. Don’t anyone tell me they haven’t let someone slide as to a “bad” thing when that someone is being used to attain a more important goal. It’s called getting what you want in life. WWJD? He wouldn’t do that; not many others wouldn’t.

  3. bloopie2 says:

    Anyone got statistics on how successful are goal-line stands in “second and one” situations? I’m just positing, maybe Seattle wouldn’t have made it regardless.

  4. Peterr says:

    Apparently, huge casinos are held to a different standard than small email providers.

    What are the odds? . . .
    Special Agent Pham, to go by the judge’s opinion at the first link (p. 31), seems like the kind of person Vegas casinos love to see:
    The court finds that Pham’s mistakes about the financial transactions were neither intentionally or recklessly false. They were mistakes based on a lack of understanding of the records that were provided and based on an unwillingness to talk with the people who could properly interpret them out of fear the investigation would be compromised.
    Vegas loves — absolutely, passionately, and unconditionally adores — people who (a) exhibit a lack of understanding when it comes to financial transactions and (b) are simultaneously unwilling to talk with those might might instruct them on how these things work.
    I believe the technical term for such a person is “a mark”.

  5. Rayne says:

    Hmm. Two things come to mind: discovery, and ownership.

    I doubt the feds want to give a casino the opportunity to use discovery in court with regard to monitoring wire transfers and electronic communications.

    And I wonder if the ownership of Caesar’s (as well as its current financial status) have anything to do with the “different standard.”

    (I find it particularly odd that the Caesar’s Entertainment Corporation [CEC] wiki page has a link to Carlyle Group at the bottom, yet I can’t find any reason for it within the *current* text of the page. Carlyle is a joint owner of a semiconductor firm with Blackstone, which is a part owner of CEC; Carlyle had been a debtholder to CEC as of 2008, but has exited the financing as of some unspecified date.)

      • Rayne says:

        Yeah, shades of Spitzer — a mysterious, as-yet-undisclosed trigger setting prosecution in motion. And discovery might just reveal that.

        The more I look at CEC’s financial condition and the manipulation of its assets, the more I wonder how this fits with TPP and Macau. The sale of CEC’s Macau site (pdf), bought in 2007 and never licensed for gambling, was at a US$140M loss to Pearl Dynasty Investments, Ltd. On the face of news reports, you’d think Pearl was an Asian company. Nope — the address given for the transaction location is in BVI, though it does have an address in Macau.

        And there’s NO name given for an executive on the sale doc, just “the sole director.”

        Whole situation is just plain sketchy.

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