Legendary Sports Gambler Billy Walters Indicted For Insider TradingGolfer Phil Mickelson Benefited From Alleged Scheme, But Avoids Charges |
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Legendary Las Vegas sports gambler Billy Walters was indicted by the federal government in New York Thursday for an alleged insider trading scheme that involved golfer Phil Mickelson.
Walters, 69, is accused of obtaining nonpublic information from Thomas Davis, the former chairman of Dean Foods Co., that benefited Walters to the tune of $110 million. Walters allegedly bought and sold stock of the company with the insider information.
Dean Foods is a Fortune 500 company that is the largest processor and distributor of fresh milk in the United States, according to the government.
On Monday, Davis pleaded guilty to conspiracy, securities fraud, wire fraud, obstruction of justice and perjury. The SEC has also filed civil charges against Davis and Walters. Davis stepped down from his position as chairman of Dean Foods in August amid the government’s investigation.
U.S. Attorney Preet Bharara, the prosector behind online poker’s Black Friday in 2011, said in a statement: “Tom Davis has admitted that, over five years as a Dean Foods board member, he repeatedly and systematically fed material nonpublic information about the company to Billy Walters, who we allege benefited handsomely by trading on that information.
"With a direct channel into Dean Foods’ boardroom, Walters allegedly traded in advance of good news and bad news alike. As alleged, it was all good news for Walters, because he had the information before everyone else—he had tomorrow’s headlines today. Brazen insider trading continues to be a blot on our securities markets, and so the integrity of our markets continues to be a priority for this office.
When the board member of a Fortune 500 company feeds inside information to a professional gambler who makes a fortune on well-timed trades in that company’s stock, that is a form of corruption."
Mickelson, who allegedly received a tip from Walters that resulted in him receiving $900,000 in ill-gotten gains, wasn’t charged criminally, but he will have to give $1 million to the government in a settlement, according to a report from ESPN.
A lawyer for Mickelson told The New York Times that the golfer, one of the highest paid athletes in America, was just “an innocent bystander.” The report said that it’s unclear if Mickelson knew the origins of the trading tip from Walters. Mickelson owed Walters from a gambling debt.
SEC chart of alleged activity between Phil Mickelson and sports gambler Billy Walters on insider trading case pic.twitter.com/isFrxsfTY6
— Darren Rovell (@darrenrovell) May 19, 2016
In exchange for the insider information, Walters allegedly provided Davis with “substantial pecuniary benefits,” including capital for joint business ventures and two loans of nearly $1 million, the government said. The two men were good friends.
According to the Las Vegas Review-Journal, FBI agents and the IRS criminal investigation agents arrested Walters Wednesday afternoon at his Bali Hai golf club on the Strip south of Mandalay Bay. Walters owns several businesses in Las Vegas.
The report added that Walters’ lawyer said the charges were “based on erroneous assumptions, speculative theories and false finger-pointing.”
“Bill Walters is a true American success story, whose extraordinary accomplishments as a lawful sports gambler have been widely recognized and lauded,” the lawyer, Barry Berke, said in a statement. “Mr. Walters and his counsel look forward to his day in court."
Federal and state investigations into Walters’ business dealings aren’t anything new. In 2002, a money laundering case against him was unsuccessful, according to ESPN. In 1992, he was acquitted of illegal gambling charges in Nevada.
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