U.S. authorities are looking into whether Las Vegas high stakes gambler William "Billy" Walters' million dollar gaming debts have any bearing on his insider trading. The golf club and real estate executive is known as a Las Vegas high roller, but little is known of his personal finances. Thanks to his role in a possible New York insider trading scandal, the public is starting to catch a glimpse of his past business dealings.
Billy Walters' supposed insider trading in 2011 and 2012 is linked to a possible insider trading scandal involving famous names such as golfer Phil Mickelson and investor Carl Icahn. Investigators have not accused the man of any wrongdoing, though the media has uncovered details which casts a suspicious light.
In a 2011 interview with CBS's television news journal, 60 Minutes, the gambler said he wagered millions of dollars a year on football and basketball and had never had a losing year. According to the 60 Minutes story, Walters has 7 homes and a $20 million jet.
Stallion Mountain Loan Debts
At the time, Walters owed over $15 million to the Federal Deposit Insurance Corp. due to his part in a Las Vegas golf club. In 2006, Waters sold the Stallion Mountain golf club, which left him with $15.25 million in debt, according to documents involved in the lawsuit. The documents were obtained by Bloomberg News, which showed the amount of money Walters owed.
The new owners of Stallion Mountain bought the golf course using a bank loan guaranteed by Walters. When the buyers defaulted on that loan during the credit crunch of 2008, the Community Bank of Nevada told Walters he would need to pay the loan himself. Community Bank eventually failed and was taken over by federal regulators at the FDIC. Suddenly, Walters owed the FDIC the $15 million.
Owned the FDIC $11.2 Million
In 2012, Billy Walters was ordered to pay $11.2 milion to the FDIC to satisfy the loan, interest, and transaction fees. When asked via email about the case, FDIC spokesman Greg Hernandez told Bloomberg Businessweek, "Mr. Walters did pay."
The FDIC case became a nationwide news story when it was learned the FBI, the Securities & Exchange Commission, and U.S. Attorney Preet Bharara are looking into large options trades by Billy Walters. PGA tour professional Phil Mickelson is another person being investigated in the options trading scandal.
2010 Clorox Co Takeover Options
Walters and Mickelson traded large options in the 2010 $10.2 billion offer for Clorox Co., along with the 2012 deal involving Dean Foods Co. At present, investigators are wanting to know whether famed corporate raider Carl Icahn shared information on his Clorox takeover attempt, which involved the $10.2 billion offer.
The investigation centers on whether Carl Icahn shared information with Billy Walters, and whether Walters then shared information with Phil Mickelson. If so, then the three men could be guilty of insider training, buying or selling a security in breach of a fiduciary duty or a relationship of trust or confidence.
What Is Insider Trading?
Most people associate insider trading with crimes, but insider trading can be legal or illegal. Corporate executives buying shares of their own company would be engaged in legal insider trading. Officials have not accused Icahn, Walters, and Mickelson of wrongdoing.
The 78 year old Icahn has not responded to requests for comments by the edia, but has said he never leaked secrets or spoken to Mickelson. The 43 year old Mickelson, who has won 5 major championships, has denied the allegations. Of course, Icahn has not yet denied giving secrets to Billy Waters.
Barry Langberg, an attorney for Mr. Walters, replied to Bloomberg with an email in which he said Walters "was not involved in insider trading."
Billy Walters' Net Wealth Is Unknown
In the wake of the scandal, the media has tried to nail down Walters' many business dealings, often without full success. Walters owns or co-owns golf courses like the Desert Pines and Bali Hai in Las Vegas, along with auto dealerships in Kentucky. At the same time, journalists have not been able to determine how much his share of the proceeds from the 2006 sale of Stallion Mountain were offset by his loan liability. It also is not clear how much paying back the golf club loan damaged his wealth.
Though he gave a 60 Minutes interview about his gambling winnings, it is hard to know how much his winnings have to do with his net worth. From 1986 to 1999, Billy Walters won the dismissal of three different indictments for conspiracy and money laundering, according to documents released in a lawsuit stemming from the Stallion Mountain deal.
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