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Famed Gambler Billy Walters Sentenced to Five Years in Prison for Insider Trading

Flamboyant sports gambler, Billy Walters, saw his luck run out, Thursday, when a judge sentenced him to five years in federal prison for his role in orchestrating an insider trading scheme. He was also ordered by US District Judge P. Kevin Castel to pay a $10 million fine and was ordered to report for his sentence, October 10.

Famed sports gambler, Billy Walters, was sentenced Thursday to five years in a federal prison for his conviction on insider trading. (Image: CNBC)

In a Manhattan courtroom, the part-time Las Vegas resident stood and heard the judge characterize him as a petty criminal, whose illegal act lacked any sophistication.

“Billy Walters is a cheater and a criminal, and not a very clever one,” Castel said. “The crime was amateurishly simple.”

It was quite a contrast to how he has been characterized as a sports handicapper. He is widely recognized as one of the best and it is estimated he has made hundreds of millions of dollars over his career in wagering on sports.

Celebrities Come to His Defense

More than 100 people, including tennis great Andre Agassi, ex-Senate Majority Leader Harry Reid of Nevada and professional golfers including Jim Colbert and Peter Jacobsen wrote letters to Castel pleading for leniency. The most passionate note was penned by his wife, Susan, who described his philanthropic nature.

“There was never a charity in town that we ever turned down,” she wrote. “There were always hard luck stories from people in Vegas and Bill could never say no. We saved many peoples’ homes, paid for medical care, paid for funerals, paid for educations and school clothes and helped people get back on their feet.”

While the judge acknowledged his charity work, prosecutors described him as “unrepentant” and recommended eight years behind bars.

Anatomy of Crime

Walters partnered with former Dean Foods Co. Chairman Tom Davis, whom he met on a golf course in 1990. The two became friends and Davis began feeding Walters information on the company in 2006. The 70 year old took the tips and bought stock, or sold positions to avoid losses, in what attorneys called a classic insider trading case.

He made at least $43 million on the corrupt tips and his profits raised red flags with the Financial Industry Regulatory Authority and they passed the information to prosecutors and the Securities and Exchange Commission.

Professional golfer, Phil Mickelson, also got entangled in the ploy. He also allegedly profited off of a tip given to him by his friend, Walters. The Hall of Fame golfer was not accused of wrongdoing, but did agree to pay back more than $1 million he made on the advice.

Prosecutors wanted Mickelson to testify against Walters, but he refused. Davis, however, did cooperate with the government and his confession was an overwhelming piece of evidence that the defense could not effectively refute.

Jurors rejected attempts by his defense team to blame the scheme on Davis, and Walters was ultimately convicted on 10 counts of fraud and conspiracy in April after a four-week trial. It has not been determined what prison Walters will have to report to.