President Trump pardoned or commuted the sentences of more than 140 people in his final hours in office, among them William “Billy” Walters, a Las Vegas businessman and gambler who was serving time for insider trading. Walters was convicted in a 2016 case that involved Phil Mickelson, and several golf industry figures lobbied the president on Walters’ behalf.
Walters was convicted in April 2017 in U.S. District Court on charges of securities fraud, conspiracy and wire fraud. Three months later, he was sentenced to five years in prison and ordered to pay a $10 million fine as well as restitution. From 2008-14, prosecutors had argued, Walters amassed more than $43 million on trades of Dean Foods that were made based on information from a former chairman.
It was an ignominious end for a man who’d spent almost his entire life gambling, whether on horse races, ball games or the stock market. In the 1980s, Walters created a network of computer-aided gamblers who took advantage of inefficiencies among various casinos’ lines and wagered up to $2 million per week on football games.
His love of gambling and his willingness to throw down high-stakes bets at any moment made him lethal on the golf course, and he spent plenty of time on courses around Vegas getting to know, and betting with, big names in the golf world. This was where Mickelson came in.
Mickelson is a well-known gambler, happy to share the stories of his wagering success and never shying away from a “friendly” wager with fellow players in the days before a tournament. As Golf Digest recounted in 2017, Mickelson used Walters as a de facto bookie, and at one point in 2012 made a $1.95 million payment to Walters “related to sports gambling,” one of many such settlements.
But Walters wasn’t just making bets on ballgames and putts. As part of an ongoing insider trading scheme that began in 2008, Walters drew in Mickelson, who — according to court records — had never before traded in Dean Foods stock. Mickelson began trading the stock in the summer of 2012, and when the stock jumped nearly 40 percent, he realized more than $931,000 in profits.
Federal investigators had been closing in on Tom Davis, the Dean Foods executive who had been feeding Walters inside information, and finally flipped him in late 2015. That left prosecutors with a question: to figure out how much Walters and Mickelson knew, given how much both had profited from the Dean Foods trades.
Prosecutors decided to focus their efforts on Walters, given that he had directly benefited from Davis’ information. Mickelson’s direct connection to Davis, on the other hand, was unclear. Mickelson declined to testify at Walters’ trial, saying that he would claim Fifth Amendment rights against self-incrimination if called by either the prosecution or the defense.
Although Walters tried to use Mickelson as a defense, indicating that Walters wouldn’t have involved such a high-profile figure in an insider-trading scheme, prosecutors were able to establish how Davis, in effect, paid off debts to Walters via inside tips. Phone and text records cross-referenced with trade dates bore out that theory.
"When [Walters] knew he had a sure winner, he let his friends in on the action,” prosecutor Brooke Cucinella said in closing arguments. “In the days leading up to the spinoff, the defendant told [another individual] and Phil Mickelson to get in on Dean Foods' stock. Now, we don't know if he told them the source of the information. But you know that Mickelson, at least, thought that the information he was getting from Walters was good enough to invest over $2 million in Dean Foods stock, some of it in his children's accounts."
The defense dismissed the idea that someone as wealthy as Mickelson would need to get any insider tips. "You see from the stipulation Mr. Mickelson always paid off [gambling debts], he didn't need any tips, given he made $48 million in one year  alone,” defense attorney Barry Berke said. “The prosecution's theory is based on lies, speculation and innuendo."
But a jury didn’t see it that way, finding Walters guilty on all counts. Prosecutors could not prove Mickelson knew of the source of Walters’ information, and thus could not prove he had intent to trade on insider information.
But he was named a “relief defendant” in a civil case brought by the SEC, meaning he profited from insider trading even if he did not himself engage in it directly. Mickelson settled that suit by surrendering both his Dean Foods profits and interest of more than $100,000, but neither admitted nor denied guilt. (As Golf Digest noted, Mickelson benefited from incredibly lucky timing; at the time of the trial, legal precedent held that secondhand beneficiaries of insider trading could not be prosecuted, but a 2016 Supreme Court case overturned that ruling.)
Trump commuted Walters’ sentence early Wednesday morning, just hours before leaving the White House to end his term in office. The commutation, which does not expunge Walters’ conviction but ends his imprisonment, won support from former Senate Majority Leader Harry Reid (D-Nev.) and several golf figures, including Butch Harmon, David Feherty, Peter Jacobsen and Mickelson.
Walters had served nearly four years of his five-year sentence and paid $44 million in fines, forfeitures and restitutions. He had been serving his time in a Pensacola, Florida, prison but was released in May 2020 because of COVID-19 concerns. He was in the process of serving out the remainder of his sentence in his home in San Diego.
Jay Busbee is a writer for Yahoo Sports. Contact him at email@example.com or follow him on Twitter at @jaybusbee.
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