Gambler Loses Bet He Could Avoid Trial by Attacking Leaks

  • Billy Walters faces insider trading charges in Manhattan
  • FBI agent is under investigation for passing secrets to media

Las Vegas gambler Billy Walters failed to persuade a judge to dismiss his criminal insider trading case over the alleged misconduct of an FBI agent for leaking details about the investigation to the media.

U.S. District Judge P. Kevin Castel in Manhattan on Wednesday said Walters failed to show he’d been harmed by the leaks, and said there’s no evidence others in the government passed confidential information to the media. The judge also noted that the agent is under investigation by the Justice Department.

“The outing of the leaker may serve to deter other faithless federal agents,” Castel wrote.

Walters is accused of orchestrating an insider scheme that also entangled golfer Phil Mickelson and Dean Foods Co. former chairman Tom C. Davis, who last year pleaded guilty and agreed to cooperate with the U.S. against him. His trial is scheduled for March 13.

In January, Walters sought dismissal of the case, alleging that FBI Agent David Chaves leaked details of a government probe of his stock trading in an effort to breathe life into a flagging investigation. Walters argued the leaks were designed to prod targets to incriminate themselves after a wiretap on Walters’s phone failed to turn up evidence.

Complex Tale

Mickelson wasn’t accused of wrongdoing, but agreed to pay back almost $1 million he earned trading on information he got from Walters.

Prosecutors contended that the leaks stalled rather than facilitated their investigation. Walters claimed news reports spurred Davis to cooperate with authorities and toss a burner phone he used in the scheme into a Texas creek. Castel said Davis destroyed the phone after the FBI visited him, not because of the news reports.

The judge said Walters provided no evidence to show that, even if the phone hadn’t been destroyed, it would have helped his case.

"If the newspaper articles had never been published, there is no reason to think that Davis would not have been indicted," Castel said. "Reading the indictment may have prompted the same reaction that Walters attributes to his reading the newspaper articles. Attributing Davis’s choice to newspaper reports six or more months earlier, on this record, is sheer speculation."

The judge said the leaks occurred as "isolated episodes" during a 20-month investigation that involved dozens of witnesses.

$43 Million

Walters, who denies wrongdoing, is accused of making $43 million by trading on tips from Davis, who the U.S. said forged a friendship with the gambler over "sports, golf, gambling and business."

Davis passed inside information about Dean Foods’ financial outlook and performance, earnings, and the spin-off of an organic food distributor in 2012, prosecutors said. In exchange, Walters offered business opportunities, investment capital and loans totaling almost $1 million to Davis, authorities said.

Barry Berke, an attorney for Walters, didn’t immediately respond to a voice-mail message seeking comment on the ruling.

The case is U.S. v. Davis, 16-cr-00338, U.S. District Court, Southern District of New York (Manhattan).

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