Walters' attorney, New York-based defense counsel Barry Berke acknowledged his client previously shared sports and stock tips with Mickelson. He scoffed, though, at the notion of Walters passing along inside information to his celebrated, now ex-friend.
"So, if you're Bill Walters -- and you believe that someone has given you illegal inside information, the last thing you would do is give it to Phil Mickelson, one of the most famous athletes in the world," Berke told jurors. "That is immediately going to track regulatory scrutiny and lead back to Bill Walters."
During the trial, prosecutors showed that Mickelson transferred nearly $2 million to cover his sports gambling debt to Walters on Sept. 19, 2012 -- a month after his big stock win in Dean Foods. Mickelson was spared criminal charges and an embarrassing court appearance, though the Securities and Exchange Commission later identified him as a "relief defendant" in a civil complaint and required repayment of $930,000 in trading profits and $105,000 in interest.
Mickelson's gambling past has been well-documented. For example, in 2016, Outside the Lines reported Mickelson's connection to an illegal offshore gambling operation. Federal court filings revealed an intermediary had acted as a conduit to pay a $2.7 million gambling debt Mickelson owed an offshore sportsbook.
Gregory Silveira, a California-based agent for the offshore site, subsequently pleaded guilty to money laundering charges and remains incarcerated at a federal prison camp in Arizona. Mickelson was not criminally charged, though the government kept the nearly $3 million that was being transferred to allegedly pay off the gambling debt.
Mickelson's camp describes him as a victim in the Walters insider trading case, though his personal attorney, Cohen, declined to say why. Phone calls were not returned by Washington, D.C.-based attorney Gregory Craig, former White House counsel to Presidents Bill Clinton and Barack Obama, who represented Mickelson during the federal investigations.
In Walters' mind, Mickelson held the key to his freedom, if he had just explained to jurors what had really happened.
"It was clear from the pleadings, the public documents during the trial, Mickelson was interviewed on more than one occasion [by FBI agents]," said Richard Wright, Walters' longtime personal attorney. "And he denied any wrongdoing on his behalf as well as Bill's behalf. Essentially denying he got any tips. He had denied that to the government. ...
"If he had testified, he would have denied he had any insider information from Bill Walters. In my judgment, it would have helped us. I can't say, 'Oh, that means we absolutely win or anything, but it would have made someone else's credibility an issue. And it just adds up."
From a legal perspective, Wright understands Mickelson being a courtroom no-show.
"Obviously if you look at it selfishly like any lawyer, if I can keep my client off of the stand that is the safest, most conservative approach that anyone can take," Wright said.
Walters' lawyers are expected to present oral arguments as early as May before a three-judge panel representing the U.S. Court of Appeals for the 2nd Circuit, seeking to overturn his conviction -- or, at the very least, allow for a new trial. The appeal alleges government misconduct, arguing that the trial judge did not allow an evidentiary hearing and that the key witness, Davis, perjured himself at trial, and the government knew it. A decision is possible before the end of the year.
Davis initially told investigators that he and Walters did nothing wrong, but after cutting a deal for a reduced prison sentence, Davis told a different story in court. He told of having provided Walters non-public information about Dean Foods over a lengthy period of time. He told of passing along such information as earnings projections, operating plans and specific company transactions. He told of being indebted to Walters for nearly $1 million in two loans. As he became more indebted, Davis added: "[Walters] became more demanding of information."
As part of his deal with the government, Davis pleaded guilty to 12 criminal counts, including securities and wire fraud, obstruction of justice and perjury. With Davis facing at least 10 years under federal sentencing guidelines, prosecutors recommended he not be imprisoned due to his cooperation, but the presiding judge sentenced the government's star witness to two years in prison, labeling Davis "a phony, fraud and a crook." Davis, who at one time enjoyed minority ownership in both the Texas Rangers and Dallas Stars, is serving time at a federal prison camp in Texas.
Davis helped the government finally get its man after decades of trying, yet not without a government black eye suffered by the FBI and Justice Department, both of whom have taken reputational hits of late. Federal documents show the case against Walters, which at the time focused on billionaire investor Carl Icahn and well-timed trading in Clorox stock, was dormant in 2013 when the lead FBI agent who had investigated the matter began leaking secret grand jury information to New York Times and Wall Street Journal reporters.
It was Walters' attorneys who raised the specter of the government leaking grand jury materials to the media, alleging the leaks were orchestrated to bring exposure to a case going nowhere. Details from the illegal leaks were published the year before Walters' grand jury indictment and included specifics on trades being examined and records being analyzed, the identity of those approached by the FBI as well as supposed targets of investigation.
Former U.S. Attorney for the Southern District of New York, Preet Bharara, initially denied the leaks ever took place, dismissing the allegation to the judge as "baseless." He described defense efforts to unmask the leaker as a "fishing expedition." Soon after, in December 2016, Bharara acknowledged the leaks as an "incontrovertible fact" and identified the source as David Chaves, an FBI white-collar crime specialist and supervising investigator on the Walters insider trading case.
At the time, Walters' attorneys argued unsuccessfully to have the case thrown out. Chaves eventually left the FBI and remains under criminal investigation by the FBI's Office of Professional Responsibility and the Justice Department's Office of the Inspector General. The government's leaking of information and subsequent reaction to it remains a significant part of Walters' appeal.
Bharara did not respond to messages left for him with the NYU School of Law, where he's currently an adjunct professor. Chaves' attorney, Sean P. Casey, declined comment. "Imagine the irony of this, an FBI agent leaks inside information to try and catch somebody leaking insider information," said Wright, Walters' Las Vegas-based attorney.
From the start, Walters and his camp butted heads with the government over what they perceived as grandstanding by Bharara, who declined Walters' offer to self-surrender when it became clear he was going to be charged with insider trading. Instead, a security staffer rushed into Walters' office late one morning in the spring of 2016, telling Walters about two armed, plainclothes law enforcement-types lurking about the Bali Hai clubhouse. Walters later strode into the clubhouse restaurant for lunch and eyed a woman, whom he perceived to be a federal agent, with a holstered gun. He alerted his attorney.
"My attorney calls the prosecutors in New York and says, 'Look, Mr. Walters has been trying to surrender himself for two months. You have people surveilling his business. Can he surrender himself?"' Walters recalled. "Well, they didn't mean to arrest me that day. They were running surveillance, and they were going to arrest me the following morning, real early. So, when he called them, they panicked, and they came down, and they arrested me."
But they didn't take him to jail right away.
Instead, with his attorney's consent, Walters spent the night with FBI agents at the J.W. Marriott in Summerlin, a casino-resort on the western outskirts of Las Vegas. He was arraigned the next day, though not before Bharara -- once dubbed the "Sheriff of Wall Street" -- held a media conference in New York. "Have you ever heard of a guy who got arrested, that they stuck in a hotel, so they could have a press conference?" Walters asked.