Mickelson Slice and NCAA Brackets Add Flair to Insider Trial

Updated on
  • Insider trial attracts Bharara’s successor, and book author
  • Mickelson’s presence looms large at trial even in absentia

When the government unveiled insider-trading charges against Las Vegas gambler Billy Walters last May, scores of sports and finance reporters from around the world flocked to the press conference, intrigued by a case that involved golfer Phil Mickelson.

As lawyers delivered their opening statements on a frigid Wednesday, the Manhattan federal courtroom was packed, this time with prosecutors and defense lawyers. But several key players in the case were missing, including Preet Bharara, the Manhattan U.S. Attorney who was fired on March 11, Andrew Ceresney, former SEC enforcement director who stepped down in December, and Diego Rodriguez, head of the FBI’s New York office who has retired.

The New Guy

Joon Kim, who was named Bharara’s successor, was in the courtroom to watch. Just before Assistant U.S. Attorney Michael Ferrara got up to speak to the jury, Kim entered the courtroom well to shake the hands of the trial team which also includes prosecutors Daniel Goldman and Brooke Cucinella.

Still new to the job as Wall Street’s top cop, Kim may not have the same kind of high-profile recognition as his predecessor, who once made the cover of Time Magazine. It was standing-room-only in the 11th floor courtroom where Walters is being tried. Kim was forced to squeeze into a seat on a bench by the back wall that’s usually reserved for court personnel. 

During a break, a court security officer stood and ordered everyone standing to move to another courtroom and watch the trial proceedings on a closed-circuit TV feed.

The officer then marched over to Kim, demanding he produce an ID, saying only federal law enforcement or U.S. Marshals were permitted to sit on the bench. Kim fumbled briefly in his suit jacket, apparently for his newly minted identification as Manhattan U.S. Attorney, when a look of recognition finally flashed over the officer’s face, and he said, "Oh, YOU. You can stay."

Book Author

Other visitors to the courtroom included Michael Kimelman, a former hedge fund manager who was convicted after his own 2011 trial of insider trading in the same courthouse. He was seated in the row behind Walters’s wife of 40 years, Susan.

Kimelman, co-founder and managing partner at Incremental Capital, served 15 months out of a 30-month sentence at the federal prison in Lewisburg, Pennsylvania. Kimelman, who’s appealed his conviction, recently penned his own book about his experience, "Confessions of a Wall Street Insider, a Cautionary Tale of Rats, Feds and Banksters." He slipped out after Walters’s lawyer Barry Berke finished his opening statement.

For more on the first day of the trial, click here.

A question still hanging over the trial is whether Mickelson will show up in person to testify. Ferrara didn’t say in his opening statement, and when the judge asked the prosecutors during jury selection, Goldman would only say that Mickelson “will be a part of this trial.”

When Mickelson was first drawn into the case in 2014, his press conference following the third round of the Memorial Tournament veered away from his even par 72 score -- which left him 10 shots behind the tournament leader -- to the Walters’ insider-trading case.

Mickelson told reporters he did nothing wrong, but couldn’t talk about it much. He later agreed to pay back almost $1 million he made on trading shares of Dean Foods.

Best Gambler

Berke called Walters "the world’s best sports gambler," so during a break Walters was asked who his pick is to win the NCAA men’s basketball tournament.

With a shy smile and twinkle in his eye, Walters quipped: “I predict it will be ... the winner.”

Plant-based Milk Products

Walters is accused of trading on insider tips from former Dean Foods Co. Chairman Tom C. Davis, who is expected to be the government’s star witness. But prosecutors first had to call someone who could describe the inside information that was the basis of the alleged leaks. For that, they summoned as their first witness Gregg Engles, Chairman and Chief Executive Officer of WhiteWave Foods Co., who Davis succeeded at Dean Foods. 

Engles described the evolving dairy business, explaining that soy and almond milk are called "plant-based milk products.” He also said as early as 2009, company executives began mulling a top-secret deal, code-named ”Project West,” to spin off WhiteWave Foods Co. Walters allegedly made more than $17 million on tips from Davis before the deal was made public in August 2012.

Judge’s Stash

As the trial progressed, U.S. District Judge P. Kevin Castel, who’s presiding over the case, has been nursing a cold, with his voice deteriorating to a gravely croak Thursday. During a break outside the jury’s presence, Ferrara stood to address the court.

"I’m not one to curry favor with the court, but I do have some cough drops," prosecutor Ferrara volunteered. Not to be outdone, Walters’s defense team immediately rose to offer Castel their own stash.

"The court does not accept gratuities and is already so prepared!" Castel said with mock horror, then held up his own oversized blue bag of lozenges.