Billy Walters, the greatest and most controversial sports gambler ever, is taking on his biggest long shot yet with a request of the U.S. Supreme Court to review his April 2017 insider trading conviction.
In the wake of a federal appeals court having upheld his conviction and five-year prison sentence, Walters' attorneys took the last-ditch legal option on May 3 of asking the Supreme Court to order the lower court to send up the record of the case for review. The court typically only takes up cases of national significance or those of precedential value. Even then, officials acknowledge the court accepts a mere 100-150 of the more than 7,000 cases that it is asked to review each year.
Walters, who in his prime had the financial muscle and acumen to move betting lines worldwide, was convicted in 2017 on conspiracy, securities fraud and wire fraud charges after prosecutors said he illegally made $40 million while trading Dean Foods Co. stock from 2008 to 2015. Walters, 72, was accused of using nonpublic information from his friend and former Dean Foods chairman Thomas Davis, who later cooperated with the government.
The case drew additional notoriety because it dragged in veteran pro golfer Phil Mickelson. Prosecutors said Mickelson made nearly $1 million after Walters told him in 2012 to buy Dean Foods stock. Mickelson gave the profits to Walters to cover gambling debts he owed him, prosecutors said. Though Mickelson never faced charges in the case, the Securities and Exchange Commission sued him over the stock trades, and Mickelson agreed to repay the money.
The gist of Walters' 36-page petition is he was charged as a result of a rogue investigation led by FBI agent David Chaves, who acknowledged the probe was at a dead end prior to his leaking grand-jury information, wiretap evidence and other case details to reporters for the New York Times and Wall Street Journal. After the FBI's New York office and the U.S. Attorney for the Southern District of New York discovered the leaks, Walters' attorneys alleged in their filing to the Supreme Court that "they deliberately turned a blind eye in order to take advantage of the leakers' misconduct and use it to resuscitate a dormant investigation.''
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.
Confronted with a similar argument as presented to the Supreme Court, the 2nd U.S. Circuit Court of Appeals in New York ruled last December that Walters' conviction was not unconstitutionally tainted by the leaks and suggested there was overwhelming evidence to support the conviction. The three-judge panel concluded, "Walters has not demonstrated that he was prejudiced.''
The court upheld Walters' prison sentence, as well as $10 million fine and more than $25 million in forfeiture.
Circuit Judge Dennis Jacobs, however, called leaks by the supervising FBI agent "in some respect more egregious'' than Walters' crimes.
"The FBI depends on the confidence of the public, jurors and judges," Jacobs wrote. "That confidence is critical to its mission; so this kind of thing is very bad for business."
Walters' attorneys subsequently wrote the Supreme Court that it was not only bad business, but the district court early on erred in denying his motion to dismiss the indictment for violations of the Federal Rule of Criminal Procedure, which requires grand jury secrecy. They argued that the government broke the law, but there is currently no legal remedy. They further argued that the district court should have provided Walters discovery or an evidentiary hearing to shed light on how the governmental misconduct impacted the criminal investigation.
The attorneys wrote that the Supreme Court should intervene and overturn the decision for two reasons:
• "First, the violations of grand jury secrecy were criminal acts, perpetrated and sanctioned by law enforcement itself, from the rank and file to the top brass, across numerous cases, which the government first covered up, then concealed from the judiciary, and then pretended to investigate in order to stymie further inquiry, all supposedly to justify the government's law enforcement goals.''
• "Second, the lower court's refusal to allow discovery or an evidentiary hearing also merits this Court's review. The government has been whittling away at (the Federal Rule of Criminal Procedure) ... spawning an atmosphere in which federal law enforcement officers are undeterred from leaking secret investigative information to the media.''
As he waits on his long shot, Walters -- who is thought to have bet more money on sports and more successfully than anyone in U.S. history, earning hundreds of millions of dollars -- is confined to the Pensacola Federal Prison Camp, a minimum-security facility housed on a naval air station on the Florida Panhandle.