Golf pro Jim Colbert was opening up his new course, Sunrise Country Club, back in the boom times of the late 1980s and early 1990s in Las Vegas. As sports editor of the Review-Journal, he invited me to join a group of politicians and celebrities for a round of golf as part of the grand opening.
I went down the pairings. I smiled. There was Billy Walters. He was the talk of the bettors at the time, picking up millions as a central member of the “Computer Group.” He and others set up a system using computers before the casino sports books had entered the digital age. They picked out games they believed gave them an edge.
The group stationed someone at each book and on a precise time, they made large wagers, which could affect the betting line. Without a quick means to disseminate the information, the books couldn’t change the odds fast enough.
And the gambling man from Kentucky made a bundle.
Oh, Billy’s something else. Each time I would see him I would snicker and ask how it was goin’. Quite well, he would say unabashedly. And rightly so. He was a winner, a rarity among Vegas gamblers. He won a lot of ways. For example, he played Michael Jordan for a reported $10,000 a hole and won big. He played poker and raked in the chips. He bet sports and won there, too. He wins in Vegas while many lose.
He bought Sunrise, which had grown to 54 holes and a name change to Stallion Mountain, then in 2006 sold it for $24.5 million. The Sunrise purchase set in motion the development of several others, including Desert Pines, Royals Links and Bali Hai Golf Club.
Desert Pines sits in a relatively poor area of Vegas. Walters was able to promote the project as a neighborhood enhancement and at the opening was paying just a $1 a year for the city-owned land.
Yeah, he can deal. He’s known for getting the best of almost every wager, but now federal authorities allege he went too far.
Not only is Walters good at gambling he’s also marvelous at beating criminals charges. He has overcome state money laundering indictments tied to his computer group sports betting operation and battled back as officials pushed through legislation making so-called “messenger betting” illegal. The law was considered directly aimed at Walters’ use of agents as “beards” for his wagers. He has escaped several other charges and investigations.
He expects to beat the latest one, too. The Southern District of New York in connection with a lengthy insider-trading investigation claims he made millions at the expense of the Dean Foods Company of Dallas, and Olive Garden parent company Darden Restaurants. Walters’ insider connection at Dean Foods, according to the government’s previously sealed information, is former longtime board of directors member Thomas C. Davis. Now accused of 12 criminal violations, Davis resigned from the company in 2015 and has agreed to cooperate in the investigation.
Walters, 69, was arrested May 18 at his upscale Bali Hai Golf Club on Las Vegas Boulevard by agents from the FBI’s public corruption squad and IRS Criminal Investigation Division.
In a statement, Walters’ longtime attorney, Richard Wright, said the prosecutors’ accusations were based on erroneous assumptions, speculative theories and false finger-pointing.
In a parallel action, the Securities and Exchange Commission announced civil insider trading charges against Walters and Davis.
“As we charge in our complaint, Walters illegally reaped tens of millions of dollars with the benefit of the ultimate ace in the hole — confidential information leaked by a sitting board member of a public company,” SEC Enforcement Division Director Andrew Ceresney said.
According to published reports, Walters and Davis met in the mid ’90s and shared common interests in sports, especially golf and business. Although their attempts at working together on their own deals faltered, in April 2010, Walters helped Davis secure a $625,000 short-term loan and then later assumed responsibility for the balance of the note, the government alleged. The two later entered into a limited liability company to invest in preferred shares of a software company, according to the government.
It’s alleged that from 2008 to 2014, Davis provided private corporate information to Walters, who used the insider advantage to purchase and sell securities. The information included Dean Foods’ financial outlook and performance, its earnings results and the plan to spin off its WhiteWave subsidiary.
Walters’ insider stock buys generated approximately $32 million in profits and avoided $11 million in losses. According to the charges, Walters was such an active investor — and his plays so profitable — that on certain trading days, his purchases or sales based on inside information amounted to more than 30 percent of the total daily trading volume in Dean Foods stock.
On Walters’ side is the insider trading investigation setback in 2014 when a federal appeals court overturned the convictions of two hedge fund officers.
Walters is not only enormously successful betting on sports, but he’s also a high-rolling player in Nevada politics, donating generously to candidates and hosting fundraisers at his restaurant and golf course. And he’s close to many in the sports world.
This case made that point. Professional golfer and three-time Masters winner Phil Mickelson will pay back the money he made from buying stock in Dean Foods after allegedly receiving privileged information, his attorney said in a statement to Reuters May 19.
Mickelson was named as a relief defendant in a civil case by the Securities and Exchange Commission that is connected to criminal charges against Walters and Davis.
Mickelson entered into the situation in 2012, the SEC said, when Walters called him about a gambling debt the golfer owed him. During the call, Walters allegedly told Mickelson to buy Dean Foods stock, which Mickelson did. When Dean Foods announced quarterly earnings and a spin-off plan about a week later, the stock jumped 40 percent and Mickelson made $931,000, according to the SEC complaint.
Mickelson faces no criminal charges. As a relief defendant in the civil case, he is not accused of insider trading or any other wrongdoing, but he allegedly benefited from other people’s wrongful action.
Reuters reported that Mickelson said he had no desire to benefit from any transaction that the U.S. Securities and Exchange Commission viewed as questionable and that he took full responsibility for having become part of the probe.
Sometimes what happens in Vegas doesn’t stay in Vegas.