Vegas Gambler Bashes Ex-Dean Foods Pal in Trial Defense

  • Walters calls Davis a thief, liar with a ‘Bat Phoney’ argument
  • Golfer Mickelson will be part of case, prosecutor said Monday

Las Vegas gambler Billy Walters isn’t holding back in his defense against government claims that he made $43 million illegally on tips provided by a golfing buddy.

Walters’s lawyer told a jury that Tom C. Davis, the former chairman of Dean Foods Co. and the government’s star witness in the Manhattan insider-trading trial, lied, stole from Walters and from a charity and cheated on his taxes. Barry Berke said Davis even made up a story about getting a burner phone from Walters in order to pass him tips -- a phone the prosecution said was called “the Bat Phone,” in a reference to the comic book hero.

“By the end of the trial, you’re going to conclude what the prosecution called the Bat Phone argument is the Bat Phony argument," Berke told the jury in his opening statement Wednesday.

Walters, 70, is accused by the U.S. of using, over six years, boardroom secrets that Davis passed on to him. The two men met more than 20 years ago on a Southern California golf course near their homes and formed a friendship that the government said was forged over "sports, golf, gambling and business."

That friendship seems to have evaporated, as Davis pleaded guilty and cooperated with the government against his former pal.

"Greed, that’s what this case is about," prosecutor Michael Ferrara said in his opening statement. "It’s about this man, William Walters, and his illegal and unlawful use of secret business information to make millions in earnings and avoid millions in losses."

Trial testimony could provide a glimpse of an exclusive old boys’ network that spanned board rooms and putting greens. Prosecutors say Davis, 68, a former investment banker, got into financial straits supporting a luxurious lifestyle and gambling habit after his retirement, eventually turning to Walters for help.

A Harvard Business School grad and Navy veteran, Davis provided Walters with lucrative secrets about deals he’d learned while serving as Dean Foods chairman, according to prosecutors. He’ll testify that he fed Walters tips in return for almost $1 million in loans, Ferrara said.

Million Reasons

“One million reasons for him to keep providing the information to William Walters,” the prosecutor said.

Walters and Davis spoke in code about their illicit trades, using "Dallas Cowboys" in place of Dean Foods, according to the government. Walters is accused of providing Davis with a disposable phone to pass the tips and reaping profits on unusually large bets in Dean Foods on at least 10 occasions, prosecutors said.

Berke told the jury of seven women and five men a very different story in defense of his client who faces as long as 20 years in prison if convicted of the most serious charges.

Davis is a liar who wrongfully implicated Walters only after he got caught stealing from a charity and cheating on his taxes, Berke said. Davis met more than a dozen times with the government and told contradictory stories, even fabricating the story about the burner phone, according to the lawyer.

"It’s a lie, like his whole story," Berke said.

World’s Greatest

Walters, whom Berke called “the world’s greatest sports gambler,” applied the same close attention to the companies he invested in as to the sports teams he bet on, the lawyer said. Walters even checked out what kind of resin Dean Foods used to make plastic milk jugs before he began buying shares in the company, Berke said.

Walters made trading decisions after assiduously researching companies and speaking to analysts -- not on secret tips, Berke said.

Walters passed the stock tips on Dean Foods to his friend Phil Mickelson, the three times Masters winner, who earned almost $1 million on the trades and used part of it to repay Walters for gambling debts, the government said. Mickelson wasn’t accused of wrongdoing, but he repaid the money he made on the trades.

Ferrara didn’t say in his opening statement whether Mickelson would testify, although he referred to the golfer as one of Walters’s friends who benefited from the inside information that the gambler passed around. Asked by the judge Monday whether Mickelson would be a witness, Assistant U.S. Attorney Daniel Goldman said only that the pro golfer "will be a part of this trial."

Walters wouldn’t have shared highly sensitive information with a famous golfer like Mickelson because he’d know it would attract regulators’ attention, Berke said.

“The last thing you’d do is give it to Phil Mickelson, the biggest golfer in the world,” he said. “It’d be akin to a bank robber putting his mask on, sticking up a bank and then stopping to talk to a police officer.”

The case is U.S. v. Walters, 16-cr-338, U.S. District Court, Southern District of New York (Manhattan).

    Before it's here, it's on the Bloomberg Terminal.