Famed Las Vegas businessman and sports gambler William "Billy" Walters was convicted of insider trading charges in a federal court on Friday. When asked about the verdict, Billy Walters told reporters, "Frankly, I'm in total shock."
A Manhattan jury took two days to deliberate on the charges, but eventually found the 70-year old businessman guilty on all 10 counts he faced. Those counts involved securities fraud, conspiracy, and wire fraud.
The convicted gambler still awaits sentencing in the trial.
Billy Walters Gambling Career
Billy Walters is one in a long line of the colorful figures in the history of American gambling. Back when he owned a car dealership and was establishing a reputation as a high stakes gambler, Billy Walters said, "You're either a hustler, or you're being hustled."
At the time, Walters was operating a bookmaking service in Kentucky. Authorities busted him for the bookie service and he was fined $1,000. That's when Billy Walters moved to Las Vegas, the best place for a serious gambler in America. He began to study sports betting in order to master the art. When he became famous as a successful high rollers, Walters claimed he was betting $2 million a day.
Phil Mickelson's Gambling Debts
The 3-week trial received a great deal of media attention, because of his history in gambling and the cases connection to PGA golfer Phil Mickelson, who had an ancillary role in the storyline. Though Mickelson was not charged with any crimes in the case, court documents showed he made a $1.9 million payment to Billy Walters in 2012 to settle a gambling debt.
Around the same time, Phil Mickelson made over $900 thousand off a one-week investment in a dairy company associated with Billy Walters. Investigators learned that Mickelson received a stock tip form Walters in the matter, but it failed to rise to the definition of insider trading, because the information related was public knowledge. Mickelson eventually repaid the revenues he made from the tip, along with interest.
Made $44 Million with Insider Trading
That kind of looseness with stock information is what cost Billy Walters in the end. The Las Vegas businessman, who some consider the most successful gambler of his generation, sat on the board of several companies. He is thought to have traded securities in these companies with insider information, eventually collecting an additional $40 million in profit in this case alone.
After a jury consisting of 6 men and 6 women found the gambler guilty, both defendant and prosecutors chose to use gambling analogies to describe the event. U.S. Attorney Joon Kim said, "Today, Billy Walters lost his bet that he could cheat the securities markets and get away with it scot-free."
Lost the Biggest Bet of His Life
Billy Walters struck a similar note when he said, "If I had made a bet I would have lost. I just did lose the biggest bet of my life."
Sentencing begins on July 14. In the meantime, Walters' chief defense lawyer, Barry Berke, said he would appeal the case. U.S. District Judge P. Kevin Caste agreed to a request from the prosecutors for Walters to be treated as a flight risk. Judge Caste ordered that Walters submit to electronic monitoring, while he will give up the use of his private plane. Judge Caste did allow for Billy Walters to return with his family to Southern California, where he will stay until sentencing in Manhattan in June.
The case stemmed from insider trading charges over a period of six years from 2008 to 2014. In that time, Billy Walters was convicted of receiving a series of tips from Thomas Davis, chairman of Dean Foods Co at the time. Walters collected $32 million in profits from those tips, while avoiding an additional $11 million in losses while using the information in stock trading.
Thomas Davis Testimony Was Pivotal
Prosecutors showed that Walters collected an additional $1 million on tips involving Darden Restaurants Inc, which owns the Olive Garden restaurant chain. Thomas Davis testified in court that he passed on information to Billy Walters in two different situations.One was before an earnings report for Dean Foods was released, while the other was inside information about a spinoff which was to happen soon for Dean Foods. Davis said the two used "burner phones" to discuss the insider tips.
During the trial, Barry Berke tried to portray Thomas Davis as a liar who himself made tens of millions of dollars with inside trading. It was a classic argument against a person who made a deal with prosecutors, that the witness had impeachable testimony. Instead, Barry Berke suggested that Billy Walters made his millions investing in companies in the same way he was a successful gambler -- by study and research of the companies involved.
2 Days of Deliberation
Ultimately, the jury found Walters' defense inadequate. Too many stories pointed towards insider trading for the jury to come to any other conclusion. In the end, even Billy Walters seemed to have admitted he engaged in insider trading when he said he "lost the biggest bet of [his] life."
