Vegas Party Followed Plea Deal in Gambler's Insider-Trading Case

Updated on
  • Berke suggests ex-chairman Tom Davis lied to get U.S. deal
  • Witness admits misappropriating $150,000 from women’s charity

A day after signing a plea agreement with federal prosecutors in New York last year, former Dean Foods Co. chairman Tom C. Davis went to Las Vegas to party.

Davis is the government’s star witness at the insider-trading trial of gambler Billy Walters. Walters’s lawyer, Barry Berke, has spent more than a day grilling Davis, depicting him as a man willing to do anything to win a “Get Out of Jail Free” card, including lying to get his former friend convicted.

On Thursday Berke questioned Davis about what he did after signing the deal in which he agreed to plead guilty to a dozen separate crimes, including securities fraud, conspiracy and perjury. In exchange, prosecutors agreed to back his request for leniency with his sentencing judge if Davis helped them by testifying.

“Isn’t it true that on the day you signed your agreement with the government, you arranged to go on a gambling junket to Las Vegas?” Berke asked, adding that records show Davis dropped $50,000 on the trip.

Davis responded that the trip was a birthday present for himself and he traveled with his wife and another couple.

“Counselor, I’d been under a lot of pressure, and had a good time,” Davis said.

Walters, 70, a Las Vegas gambler, is accused of using inside information he got from Davis about Dean Foods to make about $43 million by trading on the tips. That included $17.1 million he made ahead of the company’s 2012 announcement it would spin off a lucrative unit. Dean Foods shares surged on the announcement.

Mickelson Slice and NCAA Brackets Add Flair to Insider Trial

Davis, 68, had testified he fed Walters the information in exchange for loans. He said failed investments, his expenses, a bitter divorce and gambling debts left him in dire straits. He admitted to siphoning money from a golf charity to pay off a casino debt and for prostitutes.

Berke questioned Davis about the misappropriation of $150,000 from the charity and his dilatory repayment of some of the money only after he was found out by the U.S. Securities and Exchange Commission.

Earlier in the trial, Berke told jurors that Davis implicated his former friend because he was trying to avoid prison after embezzling money. On Thursday, he also confronted him about his gambling and lies he told regulators, the FBI and prosecutors, before agreeing to cooperate with the government in Walter’s prosecution.

Tough Questioning

"So, for more than a year you told the government and others that you never gave any improper information to Mr. Walters?" Berke asked.

"Yes, I lied," Davis said.

"Isn’t it true that’s what you told everybody before you tried to make a deal for yourself?" Berke asked.

"That’s what I told everybody before I decided to tell the truth," Davis said.

"Do you think it’s OK to lie to prosecutors when you’re trying to get a deal?" Berke asked.

"No, I don’t think it’s OK," Davis replied.

Berke also showed Davis evidence that he’d arranged a no-show job for his third wife so she could get health insurance. And he asked about expenses Davis submitted, charging the Dallas charity for a surprise party dinner for 24 that he hosted for his wife. 

Davis said he didn’t think he’d committed insurance fraud for arranging the position for his wife.

Some of those acts could violate Davis’s cooperation agreement with the government, Berke suggested. After the jury was let out for lunch, Chris Clark, a lawyer for Davis, asked U.S. District Judge P. Kevin Castel for permission to speak with his client. 

"There’s a question whether the witness has committed certain crimes and whether he’s violating his cooperation agreement," Clark, a former federal prosecutor, told Castel. "He has a right for me to counsel him. He’s not been sentenced yet."

Castel told Clark he could speak with his client during the break if Davis sought his help.

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