Magistrate: No misconduct in tattoo parlor gun sting

By Jeff German (contact)

Tuesday, Nov. 3, 2009 | 2 a.m.

Sam Morris

Agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives ran an undercover drug and weapons investigation from Hustler Tattoo shop on Highland Drive.

After more than a year of weighing evidence, U.S. Magistrate George Foley has absolved federal agents of wrongdoing in a 15-month firearms sting at a local tattoo parlor.

Defense lawyers had accused U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives agents of “outrageous government conduct,” including smoking marijuana during the sting and destroying undercover videotapes favorable to the defendants.

But in the end, in a 37-page recommendation filed late last week, Foley found that there was no misconduct in one of the more unusual federal undercover operations here in recent years.

In what was dubbed “Operation Sin City Ink,” the agents posed as operators of the Hustler Tattoo shop in the shadow of the Strip as they set their sights on violent gang members and ex-cons looking to buy and sell firearms. More than two dozen people ended up being charged in eight criminal cases.

In his recommendation, which must be approved by a federal judge, Foley concluded that the lead undercover agent in the case, Peter McCarthy, and his colleagues didn’t blur the lines between law enforcement and the bad guys.

Defense lawyers had charged that the government’s own videotapes showed McCarthy smoking marijuana.

But McCarthy, in a series of hearings before Foley, testified that he was actually smoking something called Wizard Weed, a fake drug sold over the Internet that looks and smells like marijuana.

Foley concluded that McCarthy and company had set themselves up for scrutiny by doing a poor job of documenting the use of the fake marijuana.

“The evidence is insufficient, however, to justify the conclusion that Agent McCarthy used illegal drugs during the undercover operation,” Foley wrote.

But the fight isn’t over.

Lisa Rasmussen, one of the defense lawyers who leveled the charges against the agents, said she intends to file objections to Foley’s recommendations with a federal judge.

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STEVE MARCUS / LAS VEGAS SUN file

Terrance K. Watanabe, right, claims to have lost $112 million at Harrah's casinos in 2007. He alleges the company encouraged him to gamble while intoxicated.

Despite a flap over whether he was candid on his application to practice law in Nevada, well-known Los Angeles attorney Pierce O’Donnell won court permission Monday to defend high roller Terrance Watanabe.

Following a hearing, District Judge Donald Mosley said O’Donnell was a “little reckless” in not disclosing his troubles with the California State Bar, but he said it wasn’t enough to keep him off the case in Nevada.

Chief Deputy District attorney Bernie Zadrowski, who is prosecuting the wealthy Watanabe, had pointed out what he called O’Donnell’s lack of candor on the application.

But O’Donnell insisted he was a member in good standing with the California bar, and after the hearing he told the Sun he was “grateful” to Mosley for allowing him to defend Watanabe.

O’Donnell’s presence in the case means Watanabe can expect a more aggressive defense on his behalf in the coming weeks, as he fights criminal charges stemming from his alleged failure to repay Harrah’s Entertainment $14.7 million in gambling markers.

One of the things O’Donnell intends to do is mount a legal attack on how the district attorney’s office enforces the state’s bad check law in gambling marker cases.

This could make a lot of people nervous within the casino industry, which has come to rely on the district attorney’s office in its debt collection efforts.

Watanabe may not be the only one with a lot of money riding on this case.

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Steven Brox, who runs a beleaguered courthouse counseling service, is to be arraigned Wednesday in North Las Vegas Justice Court on charges of attempting to sexually assault a 15-year-old girl.

Because Brox is too well known at the county courthouse, North Las Vegas Justice of the Peace Stephen Dahl was asked to hear the matter.

Brox’s company, United States Justice Associates, was raided by Metro Police on Sept. 15 in an unrelated extortion investigation.

Jeff German is the Sun’s senior investigative reporter.