Golfer Mickelson Paid $1.95 Million to Las Vegas GamblerBy
Walters’s Phone Calls Linked Profitable Stock Bets at Trial
Gambler is accused of making about $43 million on inside tips
Professional golfer Phil Mickelson paid Las Vegas sports gambler $1.95 million after cashing in on a stock tip that’s part of an insider-trading trial in Manhattan federal court, a lawyer for the government said Thursday.
Mickelson owed an unspecified gambling debt to Billy Walters, who is accused of using inside information to make $43 million over a six-year span, according to the U.S. Walters received insider tips from Tom C. Davis, then the chairman of Dean Foods Co., and he tipped Mickelson, prosecutors said. The golfer wasn’t charged.
Jurors heard how texts were exchanged between Mickelson and Walters in late July 2012. Mickelson purchased $2.4 million in Dean Foods shares on July 30 and 31. When Dean Foods announced the spinoff of a major subsidiary on Aug. 7, Mickelson made $931,000 in profit, money he used to repay Walters for a gambling debt, according to the U.S. Walters made more than $17.1 million on the same tip, prosecutors said.
Mickelson, a three-time Masters champion, paid back the money he made from the stock tip and has maintained he was an innocent bystander to the illegal trades. It wasn’t clear if the additional money Mickelson paid to Walters was related to gambling. In 2012, the year he paid $1.95 million to Walters, Mickelson earned a total of $48 million, prosecutors said.
"Mr. Mickelson owed similar debts to Mr. Walters in the past, and had repaid them," prosecutors told jurors, citing records from Mickelson’s sports management firm, Boulevard Management Inc.
Edward Patrick Swan Jr., a lawyer for Mickelson, declined to comment about the testimony, saying he hasn’t seen the documents which prosecutors showed the jury.
Mickelson has remained a major sideshow in Walters’s high-profile trial and was a potential witness. But Walters’s attorney said in the trial’s opening day that he didn’t intend to call Mickelson because, according to the golfer’s attorney, he intended to plead the Fifth Amendment.
In testimony Thursday, as the U.S. put the finishing touches on its case, prosecutors said Walters wasn’t risking much when he played the market in Dean Foods.
In February 2008, for example, Walters didn’t have any investments in Dean Foods, FBI agent Paul Roberts testified, in presenting Walters’s trading and phone records to the jury. Then, Davis got a message from his secretary after the close of the market on Friday, Feb. 22, 2008, telling him he’d missed a call from the gambler.
"Bill Walters called for you," she wrote. "Have a good weekend."
When the market opened the following Monday, Walters directed his broker to buy 200,000 Dean Foods shares, Roberts said. The legendary sports bettor was able to net more than $3 million, he said.
Walters also made $17.1 million ahead of the 2012 spinoff, the U.S. said. Dean Foods shares surged on the announcement.
Davis, 68, who’s pleaded guilty to 12 charges, has testified he fed Walters the information in exchange for almost $1 million loans he said he needed after failed investments, a bitter divorce and gambling debts left him in dire straits. The government’s key witness said for years he’d funneled information gleaned from Dean Foods’s boardroom to Walters but began passing integral developments about Dean Foods after Walters gave him a loan in 2010.
With agent Roberts on the stand, prosecutor Brooke Cucinella began presented a series of charts to jurors documenting Walters’s trading after a flurry of calls and texts were sent between Walters’s cellphone, Davis’s cellphone and a prepaid Verizon cellphone the government says Walters used in the scheme. The communications correlated with important earnings reports and other market-moving disclosures by Dean Foods, Roberts testified.
For example, in October 2010, Walters went from owning no shares in Dean Foods to buying 1 million shares and selling them ahead of Dean Foods’s public announcement about disappointing earnings for its third quarter. Walters avoided losses of $2.2 million, Roberts said.
Jurors were shown an instance in March 2007 where Walters amassed a position of at least 650,000 shares before the company’s announcement it was paying a special cash dividend to shareholders. Walters earned a net gain of more than $8.3 million , Roberts said.
Davis’s credibility was assailed during the trial with defense lawyer Barry Berke questioning the former executive for more than three days. Berke has described Davis as a man with a faulty memory who was willing to do anything to avoid prison, including lying to get his former golfing buddy convicted. Berke has argued that Davis concocted a story about a burner phone allegedly used in the scheme, which FBI divers weren’t able to find.
The case is U.S. v. Walters, 16-cr-00338, U.S. District Court, Southern District of New York (Manhattan).
(An earlier version of this story corrected the amount that was paid.)