Sports gambler Billy Walters was arrested at a resort in Las Vegas late Wednesday while Former Dean Foods Co. chairman Thomas Davis faced criminal charges, both for passing illegal insider business tips to debt-burdened golf star, Phil Mickelson, who was not charged with wrongdoing.
Walters, 69, and Davis, 67, have been charged with securities fraud, wire fraud, and conspiracy. Davis, in addition, has been charged with perjury and obstruction of justice. While Mickelson, 45, was free from criminal charges but was instead named as a relief defendant in the case.
According to the Securities and Exchange Commission complaint, Walters received insider tips and boardroom secrets from ex-Dean Foods chair, Davis, since 2008. Davis, who is also a golfing buddy, allegedly provided him information that could be used to buy and sell stocks and profit from one of the US’s leading food and beverages companies.
Walters and Davis, according to authorities,would sometimes speak in codes, referring to the company by the name “Dallas Cowboys.”
Later in July 2012, Walters allegedly talked to Mickelson via a telephone call, urging him to trade in company stock.
“Mickelson had placed bets with Walters both before and after July 2012 and owed Walters money at the time of the telephone call,” the complaint states.
The professional golfer who also goes by the name of “Lefty”reportedly bought 200,000 shares of Deans Food Co the next day with the use of three brokerage accounts. This equates to $2.4 million worth of investment in the company.
In August 2012, roughly one week after the illicit transactions were done, the value of Dean’s stock rose up to 40 per cent. The complaint said that Mickelson sold his shares immediately at a profit amounting to about $931,000.
“Mickelson repaid Walters in September 2012, in part with the proceeds of his trading,” SEC said in a statement.
“Mickelson made money that wasn’t his to make,” said Andrew Ceresney, director of the SEC’s Division of Enforcement, in a news conference in Manhattan Thursday. However, Ceresney refused to explain why the professional golfer was not part of the criminal case.
“Phil has not been charged with insider trading,” Gregory Craig and Pat Swan, attorneys for Mickelson, said in a statement to USA TODAY Sports. “Phil was an innocent bystander to alleged wrongdoing by others that he was unaware of. Phil is innocent of any wrongdoing,” they further explained.
The debt-burdened golfer agreed to pay $1 million to the Securities and Exchange Commission for the offense of illegal trade practices.
Meanwhile, Mickelson’s wealth grew with an $80 million gain via tournament winnings. He also had earnings coming from endorsements that doubled the amount of his winnings. Moreover, Forbes declared him to be part of the world’s highest paid athletes, being number 8 in the list with earnings of $51 million last year.