Billy Walters Received Insider Information Via “Bat Phone,” Jury Hears

Posted on: March 22, 2017, 05:00h. 

Last updated on: March 22, 2017, 03:52h.

Former chairman of Dean Foods Thomas Davis told a Manhattan federal court on Tuesday that he regularly shared privileged insider information about the company with Vegas sports betting legend Billy Walters.

Billy Walters trial, Thomas Davis gives evidence
Sports betting Billy Walters faces multiple charges of wire fraud and securities fraud.The alleged source of insider information, his former friend, Thomas Davis, testified against him this week. (Image: Alec Tabak/New York Daily News)

The pair would communicate via specially designated prepaid cellphones which they called their “bat phones,” Davis said.

Walters is on trial accused of profiting from illegal stock market trades on Dean Foods, a Dallas-based company and one of the largest processors of milk in the US.

It is also alleged that Walters shared insider information, obtained from Davis, with his friends, including the golfer Phil Mickelson, who is scheduled to be called as a witness for the defense.

Innocent Meeting

Davis said that the relationship had started “fairly innocently” after the pair met at a California golf course in the mid-nineties. He was happy enough to offer the occasional stock market tip in the hope he’d get some sports betting advice in return, he said

But the nature of the relationship changed when Davis borrowed almost $1 million from Walters. After that, it “grew to a point where I was a virtual conduit” for inside information, he said.

“I became indebted to him,” he said. “He became more demanding of information.”

Davis said he offered Walter company secrets via the Bat Phone for over seven years, until 2014, including earnings information and upcoming pivotal transactions.

He gave testimony this week as part of a plea bargain with federal prosecutors, after admitting charges including securities fraud and wire fraud.

Walters Made $40 Million on Trades

Davis initially denied involvement when he was approached by federal agents in 2014. Authorities’ suspicions had been aroused after it emerged Walters had made over $40 million on trades on Dean Foods over the years, including around $17 million between May 2012 and August 2012 alone.

After their visit, Davis threw his bat phone into a creek, he said, but later decided to come clean after he suffered a stroke and realized the impact the investigation was having on his family and himself.

“I used very poor judgment and I was scared to death that I had made some terrible mistakes and I wanted to cover it up,” he said. “I lied to everybody.”

Mickelson has not been charged with an offense, although he did return $1 million he earned in 2012 on one of Walters’ trading tips.

Walters pleads not guilty and his lawyer contends Davis is lying.

The case continues.