FBI Agent Turns to Ex-Prosecutor for Help in Insider-Leak Probe

  • David Chaves named as agent suspected of leaking to the press
  • Chaves hires ex-Brooklyn prosecutor Sean Casey in leak case

An FBI agent turned to a veteran former federal prosecutor to defend him in a probe over leaks of information to the press about an insider-trading investigation of golfer Phil Mickelson and gambler Billy Walters.

David Chaves, who’s been involved in some of the government’s key prosecutions against Wall Street traders in the last decade, was identified in court papers Wednesday. His name was initially blacked out.

Walters, who’s accused on trading shares of Dean Foods Co. based on tips from the company’s former chairman Thomas Davis, may use the information about the leaks to try and get the charges dismissed. The leaks were so pervasive that the probe was thrown into turmoil in 2014 as newspapers prepared to publish confidential details that only investigators should’ve known, according to court documents.

Chaves’s lawyer, Sean Casey, declined to comment on the agent’s outing. Casey, a former assistant U.S. attorney in Brooklyn, was involved in prosecutions that included two Bear Stearns Cos. fund managers as well as former Comverse Technology Inc. Chief Executive Officer Jacob "Kobi" Alexander.

Chaves was one of two agents supervising white-collar investigations at the Federal Bureau of Investigation in New York, including a series of insider-trading cases involving hedge funds that the bureau dubbed “Perfect Hedge.”

Federal prosecutors told U.S. District Judge P. Kevin Castel at a Dec. 21 hearing that in interviews Chaves admitted he’d provided confidential information about the government’s insider-trading probe to reporters at the Wall Street Journal and New York Times.

Chaves Leaks

It’s not clear how much Chaves leaked to the press, the prosecutors said. He denied having provided all the information that appeared in the newspapers about the Walters and Mickelson probes, they said.

The U.S. Justice Department started a criminal investigation into the leaks.

Of the 14 people who were aware of the investigation, including prosecutors and agents, only Chaves "admitted to involvement in the leaks," prosecutors said.

Mickelson, who was also investigated by the FBI, reached an agreement with the U.S. Securities and Exchange Commission to return proceeds of almost $1 million. He wasn’t accused of wrongdoing.

Adrienne Senatore, a spokeswoman for the FBI’s New York office didn’t immediately return a voice-mail message seeking comment about the disclosure. Nicholas Biase, a spokesman for Manhattan U.S. Attorney Preet Bharara, declined to comment.

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