Fault Lines
16 February 2019
billy walters

Billy Walters Bets Big On Manhattan Trial

March 17, 2017 (Fault Lines) — What do the stock market, sports betting, and criminal trials have in common? They are all forms of gambling. Billy Walters, the world’s most successful professional gambler, is hoping he can outplay the government and walk away from federal insider trading charges this week.

The dream of every male in America is to take those drunken, wild Vegas nights and turn them into a living. Billy Walters not only did that, he did it well. He went from a poor Kentucky kid to a multimillionaire Vegas business mogul.

[Author Richard] Munchkin says now: “Walters is the only person I know who started out a degenerate gambler and became a successful one. He’s a mythical figure in Las Vegas.”

Walters is now on trial for insider trading. Mario Machado set out the story last year here at Fault Lines. The case involves not just high profile allegations, but millions of dollars and a popular professional golfer.

In a nutshell, the government is alleging that [Tom] Davis leaked inside information to Walters that generated $40 million (!) for Walters in gains and avoided losses. [Pro golf star Phil] Mickelson’s alleged role in the affair is that he received information from Davis about an upcoming corporate spinoff, and that Mickelson then bought millions of stock in a subdivision of Dean Foods (of which Davis was the chairman). After the spinoff materialized a week later, Mickelson made close to a million dollars in profits, but Mickelson has (so far) been spared an indictment and he will likely be sitting in a witness box instead of defense counsel’s table.

The government hates winners and there is no doubt Walters was a big winner. The feds have been after him for a long time.

Kent teamed up with Ivan Mindlin, a local doctor with a gambling habit, and brought in Walters to lay bets. In a 2015 interview, Mindlin said that the operation brought in “hundreds of millions of dollars.” It also attracted federal wire taps and police raids in 1985.

“After five years of creaming the casinos, we had our doors busted down by the FBI,” Mindlin said in the 2015 interview. He did not respond to a call last week seeking comment.

The episode led to indictments against Walters, his wife and 17 others for conspiracy and interstate gambling-related offenses. They went to trial and were acquitted. Billy Walters was later indicted by Nevada officials three times for the same offenses, which included money laundering. Those charges were ultimately dismissed.

As trial begins this week, Walters is hoping he can pull off another big win. The two sides are telling very different stories. The government, as always, says there is no way Walters hit a $40 million stock jackpot without cheating. Walters’ attorney, Barry Berke, says the government’s house of cards is built on a liar.

Davis is a liar who wrongfully implicated Walters only after he got caught stealing from a charity and cheating on his taxes, Berke said. Davis met more than a dozen times with the government and told contradictory stories, even fabricating the story about the burner phone, according to the lawyer.

“It’s a lie, like his whole story,” Berke said.

Insider trading cases can be notoriously hard for the government to win, unlike pretty much every other kind of case. Even with a snitch and a good story, this case is going to be particularly hard. While Walters made a fortune on this specific stock, his defense attorney’s opening argument was that Walters was just using the same skills he used to parlay a sports betting habit into millions of dollars.

Walters, whom Berke called “the world’s greatest sports gambler,” applied the same close attention to the companies he invested in as to the sports teams he bet on, the lawyer said. Walters even checked out what kind of resin Dean Foods used to make plastic milk jugs before he began buying shares in the company, Berke said.

Walters made trading decisions after assiduously researching companies and speaking to analysts — not on secret tips, Berke said.

The government takes a different view of Walters’ activities. The stakes are high in this case.

The case offers federal prosecutors in New York the chance to return to their winning ways, said Anthony Sabino, who teaches law at St. John’s University in New York.

“This is definitely an opportunity for prosecutors to reclaim past glory,” he said.

That’s good to hear, because we certainly wouldn’t want the poor federal prosecutors in Manhattan to have their egos bruised. And this may be the case for that.

But [the defense team] may try to tell jurors that the government failed to get any incriminating evidence after wiretapping Walters’s mobile phone and recording about 1,700 calls in 2014, according to a March 11 court filing. Prosecutors are trying to block Walters from using the wiretaps as evidence, arguing he went out of his way to make innocent explanations for his trades after he became aware from media reports that he was under investigation.

Of course the government wants to hide that evidence from the jury. If they hear that hundreds of hours of phone calls didn’t reveal any criminal activity, they might acquit him or something. It also sounds like the government will have to answer for playing dirty at the beginning of the case.

In another twist, Walters’s lawyers are likely to highlight leaks by an FBI supervisor about the investigation to two newspapers in 2014. They unsuccessfully tried to have the charges dismissed based on FBI misconduct, saying the articles may have pressured Davis to cooperate, but the judge has allowed the defense to ask about the leaks at trial.

“The leaks don’t have anything really to do with the case, but if Davis admits he responded to the news stories, that may be a back door to getting the FBI agent’s misconduct into the case,” [law professor Peter] Henning said. “It might be hard to put the government on trial in this case, but that might be the avenue to do it.”

In the end, Walters and his lawyers are going to have to convince a jury that his fortune in the stock market was built on the same set of skills and research his gambling fortune was built on. But against federal prosecutors, who have a conviction rate of over 90%, Walters could use a little luck, too.

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  • clonedaddy
    17 March 2017 at 10:39 pm - Reply

    It’s always been a source of wonder to me how Walters continued to bet, as no casino is going to take the action of someone who wins consistently at any game, and messenger betting is illegal in Nevada.