US prosecutors laid charges Thursday against a prominent Las Vegas gambler and the ex-chairman of Dean Foods in an insider trading case that enmeshed top professional golfer Phil Mickelson. The Justice Department and the Securities and Exchange Commission said that over six years Thomas Davis, the former Dean chairman, supplied inside tips on Dean and on Darden Restaurants to William Walters, the gambler, that led to $40 million in profits or avoided losses.
Davis provided the tips in part to get help with his financial problems, "including $100,000 Davis had wrongfully taken from a Dallas-based charity he managed that raised funds for a battered women and children's shelter," the SEC said. Walters meanwhile implicated three-time Masters champion Mickelson in the scheme by urging him to trade in Dean stock to help him repay gambling debts to Walters. Mickelson is not charged in the scheme but was named as a "relief defendant", and as such gave up the nearly $1 million he made on the trade.
Mickelson neither admitted nor denied the allegations in the SEC complaint and agreed to pay the $931,738 in ill-gotten gains, plus $105,292 in interest, the SEC said. The scheme developed around Davis's mounting personal and gambling debts, which he first raided the charity to cover and then sought help from Walters, ultimately borrowing more than $1 million from Walters. "Walters funded Davis, despite the fact that Davis had proven himself a huge credit risk," the SEC charges said.
It said that as Davis provided Walters with nonpublic information on Dean and Darden that generated huge trading profits, "Walters made no attempts to collect even a penny of the funds that he had directly and indirectly provided to Davis." Mickelson's attorneys, Gregory Craig and Pat Swan, said the golfing champion was "an innocent bystander to alleged wrongdoing by others that he was unaware of." "The SEC has now completed its investigation... and has concluded that Phil Mickelson did not engage in any wrongdoing," said a statement the lawyers released on behalf of Mickelson.
"The SEC has filed a civil complaint against certain individuals, including an acquaintance of Phil's, but that complaint does not assert that Phil Mickelson violated the securities laws in any way. On that point, Phil feels vindicated." However, "Phil has no desire to benefit from any transaction that the SEC sees as questionable" and agreed to return all the money, said the statement.
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