Judge Puts Gambler’s Private Jet on a Leash

     MANHATTAN (CN) — Sin City’s high-roller William “Billy” Walters can keep using his private jet while fighting charges for a $40 million insider-trading scheme, but pretrial services may put a crimp in his itinerary.
     Authorities arrested Walters last month in Las Vegas on the heels of a federal indictment charging the 69-year-old with trading on confidential information sent to him by former Dean Foods chairman Thomas Davis.
     While Walters agreed to a less restrictive bail package in a Las Vegas court, one high-profile beneficiary of the scheme, celebrity golfer Phil Mickelson, reached a $1 million restitution deal with the SEC to avert charges.
     Walters pleaded not guilty on Wednesday before a magistrate in New York, where the case was filed. The Henderson, Nevada-based gambler appeared calm as his defense team fought attempts by prosecutors to stiffen his bail package to $50 million.
     “I find the government’s request surprising, if not entirely unprecedented,” said Barry Berke, an attorney for Walters with Kramer Levin Naftalis & Frankel.
     Insisting that his client needs access to his private jet, Berke said Walters travels too frequently to operate his businesses and visit his developmentally disabled son in Kentucky to wait on line for commercial air travel.
     Recent horror stories about Transportation Security Administration funding shortfalls were not lost on the U.S. Magistrate Judge Andrew Peck.
     “I won’t even make any cracks about the current TSA situation,” Peck quipped.
     Later that afternoon, however, U.S. District Judge Kevin Castel showed less sympathy for Walters traveling with the hoi polloi.
     The judge even choked on his surprise after defense attorney Berke mentioned how his client stayed at a hotel following his arrest.
     “A hotel?” Castel asked incredulously. “Is that what they customarily do for defendants? Put them up in a hotel?”
     Assistant U.S. Attorney Brooke Cucinella meanwhile said that the seriousness of the charges would make it tempting for Walters to use his international connections.
     “This is one of the largest profits we have seen from an individual investor,” she said.
     With an estimated $200 million net worth, Walters runs dozens of businesses in California, New York, Kentucky, Florida, Georgia and Arizona.
     For a time, Walters lived in Mexico, and had a gambling business in Panama, Cucinella noted.
     “This is not your average defendant,” Cucinella said, ridiculing the position that giving up his private plane would be a “major imposition on the defendant’s lifestyle.”
     Magistrate Peck suggested addressing the defendant’s flight risk by forcing Walters’ pilot and co-pilot to sign a portion of his $25 million bond, half of what prosecutors demanded.
     Cucinella worried that fear of prosecution and civil penalties would not be enough to deter the pilots from helping their multimillionaire boss leave the country.
     “They are under [Walters’] sway,” the prosecutor said, referring to the pilots. “They are his employees and are loyal to him.”
     Cucinella also repeated the allegation that Walters used burner phones to avoid detection.
     “This is a person who believes that he is above the law,” she told the court. “He has flouted the law for years.”
     Though Castel largely left Walters’ bail package untouched, the prosecutor’s arguments convinced the judge to tighten restrictions on his travel.
     The gambler is preapproved for travel in four federal judicial districts in New York and California, but pretrial services must approve all travel in the other states where the multimillionaire runs businesses.
     The agency “may” demand that Walters fly commercial for these trips, Castel said.
     Prosecutors anticipate a speedy trial for Walters, and told the court that they have largely sifted through the 200 gigabytes of evidence in the case and will turn over one wiretap recording to the defense.
     The parties will meet again for a hearing on July 29.
     As the case law on insider trading evolves, the prosecution may have a difficult road to hoe.
     Defense attorney Berke noted at one point today that prosecutors in the Southern District of New York have experienced setbacks insider-trading cases like these.
     The Second Circuit’s ruling that prosecutors must prove a personal benefit to convict a defendant of insider trading toppled the securities fraud convictions of Level Global Investors co-founder Anthony Chiasson and one-time Diamondback Capital Management portfolio manager Todd Newman.
     U.S. Attorney Preet Bharara had warned at the time that the precedent would lead to “a potential bonanza for friends and family of rich people,” The New York Times reported.
     The U.S. Supreme Court will soon clarify the state of the law after taking up the case U.S. v. Salman out of the Ninth Circuit.

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