Sports Gambler’s Insider Case Proves Good Bet for Prosecutors

Las Vegas sports-betting legend Billy Walters passed along one” sure win” inside stock tip to Phil Mickelson in 2012, allowing the golf champ to make almost$ 1 million and repay a gambling debt to him.

Five years later, the 70 -year-old gambler could face years in prison after a Manhattan jury found him guilty of stimulating $43 million thanks to another golfing buddy who was the source of boardroom secrets. Mickelson, meanwhile, will be taking swings in third-round play at the Masters tournament on Saturday.

Friday’s verdict followed a four-week trial that spotlighted a seamy world of gambling indebtedness, stock tips delivered on burner phones and charity fund spent on prostitutes. The trial also offered a glimpse of a rarefied world where corporate executives mixed with professional athletes on some of the country’s top golf course. In addition to Mickelson, billionaire investor Carl Icahnwas among the friends of Walters and jurors heard tales of private airplanes, Hamptons vacations and trip-ups to Monaco and Paris.

For attorneys, the verdict was a dramatic comeback after trial wins in a crackdown on Wall Street fraud were cast out in 2014 by an appeals court and the rules re-written to favor defendants.

The verdict” shows the government can make a instance based on some financial-friendship interaction and doesn’t need to have a pouch of cash exchanging hands ,” said Peter Henning, a statute prof at Wayne State University in Detroit and former prosecutor.” This shows the government can still bring the golfing-buddy type of insider trading occurrence and continue to be aggressive.”

Walters’ Broker Saw Accused Inside Trader as’ Babe Ruth of Risk ‘

Prosecutors won their instance calling as their starring witness Tom C. Davis, the former chairman of Dean Foods Co ., who testified he became a” virtual conduit” of inside information to Walters, feeding him tips-off learned from his own committee meetings.

Debts, Divorce

Davis, whose witnes spanned four days, told jurors he passed tips about the dairy company to Walters because he was ” enamored” of him. Walters in turn loaned him nearly$ 1 million that he needed to pay off lottery indebtedness, cover failed investments and finance a bitter divorce. Davis, 68, pleaded guilty to a dozen separate crimes and agreed to cooperate with attorneys in a bid for leniency when he’s sentenced.

Davis passed tips to Walters via text messages on secret phones devoted code names such as the” Bat Phone ,” attorneys said. For at the least six years, Walters traded on the tips-off, making a profit or avoiding a loss ahead of company news. Davis admitted that, after FBI agents questioned him in 2014, he tossed that phone into a creek, where it was never found.

One juror said after the verdict that bellow logs helped persuade him that Davis and Walters had been in constant contact using burner phones just before important company announcements, corroborating Davis’s account.

“It all came down to the trading and those telephone records, ” said the juror, a maintenance worker who lives in Manhattan who declined to give his name. “While both sides in the case did a good job, the paperwork was too great .”

Davis’s estranged spouse, Terie Davis, also helped demonstrate the lawsuit, the juror said. She said she’d seen her husband using the phone and, fearing he was cheating on her, searched the call log. She said she was relieved to discover he had been using the phone to text Walters.

” She was important because she told us that, yes, the phone existed, ” said the juror.

10 Counts

The jury convicted Walters of all 10 countings, including conspiracy, wire and securities scam. When he’s sentenced July 14, he could face a prison term of as long as 20 years on “the worlds largest” charge.

Mickelson wasn’t charged with wrongdoing although he agreed to repay the profit he made with tips-off from Walters. Trial evidence included that Walters texted Mickelson in July 2012 ahead of a lucrative spinoff by Dean Foods. Mickelson, who had never bought the company’s shares, attained $931,000 when the stock surged when it was announced. He utilized that money to refund a gambling debt to Walters, transferring $1.95 million, according to records presented jurors.

The golfer was listed on a listing of potential witnesses for Walters, but wasn’t called after stimulating it clear to lawyers he would invoke his Fifth Amendment right against self-incrimination, an attorney for Walters told the judge.

Seven Homes

Barry Berke, Walters’s lawyer, said he will appeal. Unless he’s successful, Walters will be forced to walk away from Las Vegas-based conglomerate that includes golf course, auto dealerships, car-rental agencies and a golf-vacation business, with total revenue of $500 million in 2013, according to testimony from his company’s controller. Walters, who didn’t testify at the trial, has said he owns seven homes and a $20 million jet.

Until Friday, Walters had been free on $25 million bond but had been permitted to travel on his private airliner between New York City and Southern California, where he owns homes. After the verdict, U.S. District Judge P. Kevin Castel ordered Walters to be placed under house arrest at his home merely north of San Diego, wearing an electronic bangle and barred him from flying on his jet.

Walters, who didn’t testify at the trial, shake his head and seemed shaken when the verdict was read. He has beaten the odds before. Born in Kentucky, the son of a professional gambling and a teenage mom, Walters began shooting pond — nine ball — at age 4 and by 10, he had progressed to gambling. Decades ago, he was acquitted of state gamble charges after a trial and won dismissal of state indictments accusing them of conspiracy and money laundering.

Walters, who had boasted that he never had a losing year wagering on football and basketball, was stunned by the verdict.

“If I would have made a bet, I would have lost, ” Walters told reporters as he left the Lower Manhattan courthouse with his wife, Susan, and his legal squad. “I merely did lose the biggest wager of my life. Frankly I’m in shock.”

The case is U.S. v. Walters, 16 -cr-0 0338, U.S. District Court, Southern District of New York( Manhattan ).

Read more: www.bloomberg.com

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