MANHATTAN (CN) — The former head of the nation's largest dairy producer fed a steady stream of inside tips to one of Sin City's highest-rollers, federal prosecutors charged on Thursday.
Professional sports gambler William "Billy" Walters faces a federal indictment charging him with trading on confidential information sent to him by former Dean Foods chairman Thomas Davis.
A resident of Dallas, Texas, 67-year-old Davis pleaded guilty to criminal information against him this morning.
Both men also face a civil case from the Securities and Exchange Commission, which names celebrity golfer Phil Mickelson as an uncharged beneficiary of the scheme.
Mickelson will return more than $1 million plus interest in restitution, the SEC said.
The government filed all three proceedings this morning in Manhattan.
According to court papers, Walters and Davis kindled a longstanding friendship based on their shared interest in sports, golf, business and gambling.
U.S. Attorney Preet Bharara milked their high-rolling reputations at the press conference dominated by double-entendres.
"These bets were no gamble at all," Bharara told reporters. "They were a sure thing because, armed with inside information from Davis, Walters traded in advance of good news and bad news alike. It was all good news for Walters because he had the information before everyone else. He had tomorrow's headlines today."
Walters, for his part, appears ready to roll the dice by contesting the allegations in court.
"Bill Walters is a true American success story, whose extraordinary accomplishments as a lawful sports gambler have been widely recognized and lauded," his attorney Barry Berke, with Kramer Levin Naftalis & Frankel, said.
"Mr. Walters' renowned work ethic and many other talents also have helped him achieve great success in business, investing and philanthropy," Berke continued. "Mr. Walters and his counsel look forward to his day in court where it will be shown that the prosecutors' accusations are based on erroneous assumptions, speculative theories and false finger-pointing."
Prosecutors point to what they describe as a wide range of criminal trading on Dean Foods, the company behind Land O'Lakes and other major supermarket brands.
Between 2008 and 2014, Davis allegedly sent Walters information about earnings, financial performance, internal forecasts, and proposed mergers and acquisitions, including news of Dean's plans to spin off The WhiteWave Foods Company, its organic products subsidiary behind the brand Horizon, according to court papers.
"In 2013, Davis also provided Walters with inside information that Davis obtained from a group of investors who confidentially shared their plans to buy the stock of Darden Restaurants Inc. with the goal of pushing the company to make corporate changes," the SEC's summary states. "Based on these tips, Walters traded Dean Foods and Darden securities and reaped illicit trading profits and avoided losses totaling at least $40 million."
Walters and Davis used coded language to disguise their illicit trading, referring to Dean Foods as the Dallas Cowboys in conversations on a prepaid phone, prosecutors say.
The men had been in business together before and during the scheme, through investments in golf courses, a software company and bank recapitalization, according to court papers.
But Davis allegedly shared the information for more than friendship.