Four times, authorities went after famed Las Vegas sports gambler William T. Walters, and four times the man known as Billy emerged victorious.
But on Friday, Walters’ luck turned, as a federal jury in Manhattan convicted him on fraud and conspiracy charges in one of the biggest insider trading trials in years.
“To say that I was surprised would be the understatement of my life,” Walters, 70, told reporters as he left the courtroom.
“If I would have made a bet I would have lost. I just did lose the biggest bet of my life. Frankly I’m in total shock.”
His lawyer, Barry Berke, said he would appeal the verdict.
Walters, one of the most successful professional sports gamblers in the country, was accused in the latest case against him of using non-public information from Thomas Davis, a board member of Dean Foods of Dallas, to make more than $US40 million from 2008 to 2014 by realising profits and avoiding losses.
The investigation into Walters’ activities and subsequent trial drew in prominent figures like Carl Icahn, the billionaire investor and unpaid adviser to President Donald Trump, and Phil Mickelson, the champion professional golfer. Swift decision
The conviction of Walters lifted something of a cloud that had hung over the US attorney’s office in Manhattan since December 2014, when a federal appeals court threw out the insider trading convictions of two hedge fund managers. That ruling led prosecutors to vacate the convictions and guilty pleas of several other people.
The verdict against Walters was also a coda to a series of insider trading prosecutions led by Preet Bharara, the former US attorney for the Southern District of New York who was fired days before the trial began.
The jurors in Walters’ case reached their decision after deliberating for a little more than half a day, rendering a swift decision in a trial that lasted 14 days spread over four weeks.
The quickness of the verdict vindicated the government’s trial strategy, including a decision to give a central role to Davis, an acknowledged embezzler and philanderer who had pleaded guilty to several offences connected to the insider trading scheme.
Davis, the government’s main witness, had his credibility repeatedly called into question by lawyers for Walters. The defense team said Walters had been falsely implicated by Davis, who was desperate to escape punishment for his own misdeeds.
One juror interviewed outside the federal courthouse in lower Manhattan where the trial was held said that he and the rest of the jury had not been swayed by that argument.
“We looked at his credibility,” the juror, Lonnie Drinks, said of Davis. “Everything was factored.”
Walters was convicted of 10 charges of securities fraud, wire fraud and conspiracy, the most serious of which carry a potential sentence of up to 20 years in prison.
“Armed with his illegal edge, Walters made huge, perfectly timed trades, at times accounting for over a third of the trading volume in Dean Foods stock,” Joon Kim, the acting US attorney in Manhattan, said in a statement.
“In engaging in his yearslong stock fraud scheme, Walters underestimated law enforcement’s resolve to pursue and catch those who cheat the market.”
Walters, who was once profiled by “60 Minutes” because of his betting prowess, was not the only big name to come up during his trial. The Icahn connection
Icahn emerged in testimony and court filings as having had frequent discussions with Walters. A broker for Walters testified on cross-examination that some of Walter’s stock-trading ideas had come from Icahn, who was not charged with wrongdoing.
During a hearing outside the presence of the jury, one of Walters’ lawyers told the judge that Walters and Icahn were friends.
The lawyer, Paul Schoeman, added: “Mr. Walters has a long history of investing in stocks that Mr Icahn has publicly announced he’s interested in.”
Mickelson was also mentioned during the trial as someone who had traded in Dean Foods shares and once owed nearly $US2 million in gambling debts to Walters.
Mickelson made roughly $US1 million trading Dean Foods shares; he agreed to forfeit those profits in a related civil case brought by the Securities and Exchange Commission.
Known as “Lefty” for his left-handed stroke, Mickelson was not criminally charged. Though he was once seen as a potential witness at Walters’ trial, he was never called to testify. Tips on the Bat Phone
Prosecutors said that Walters had tried to hide his actions by supplying Davis with a prepaid mobile phone called the Bat Phone to use while conveying secret information and by sometimes speaking in code.
During the trial, prosecutors displayed phone logs and trading records, and an agent with the FBI testified that Walters sometimes made major trades within moments of speaking with Davis on the phone.
For instance, the agent testified, Davis and Walters spoke on the phone for 10 minutes one day in 2008 beginning at 12:54 pm. At 1:05 pm, Walters bought 462,200 shares of Dean Foods stock for about $US9.3 million.
Davis provided Walters with secret Dean Food information about future earnings statements, the planned purchase of another company and a pending initial public offering, prosecutors said.
At the same time, Walters arranged for loans of nearly $US1 million to Davis, who had financial problems and repaid only a small portion of what he borrowed, prosecutors said. ‘Babe Ruth of Risk’
Defense lawyers offered a contrasting account. They said that Walters was a skilled and fearless trader, referred to by one of his brokers as “the Babe Ruth of Risk,” who did not need inside information. Davis, Walters’ lawyers said, was trying to save himself by maligning Walters.
The competing narratives were on display throughout the trial. Davis testified that he had acted as a “virtual conduit” of secrets and had supplied Walters with an “enormous” amount of information.
At one point, Davis said, Walters provided him with the Bat Phone to use while communicating about Dean Foods, adding that later he had thrown it into a creek after federal agents visited his home.
Davis also testified that Walters sometimes spoke in code, using “Dallas Cowboys” to refer to Dean Foods and asking “How’s the milkman doing?” when inquiring about the company, then the country’s largest dairy processor.
Defense lawyers cross-examined Davis at length, eliciting acknowledgments that he had been squeezed for money, had taken $US100,000 from a charity he ran, had mislabelled expenses on his taxes and had lied to many people, including investigators with the SEC.
Walters’ lawyers suggested that Davis had misled prosecutors about his sports gambling habits and his contact with prostitutes, at one point reading into the record phone numbers for escort services in Chicago, Denver, New York and San Francisco that Davis, who told prosecutors he had not hired prostitutes in recent years, had called in 2010, 2011 and 2014.
Berke also questioned the existence of what he called the “so-called Bat Phone,” which was never recovered, pointing out that Davis had first told prosecutors that it was black before then testifying at trial that it was maroon.
The New York Times