It was a bet noted sports gambler Billy Walters said he was surprised he lost, but on Friday he doubled down, instructing his lawyers to file an appeal on his insider trading conviction.
His attorneys believe they have a compelling argument for a new trial, saying in court papers that a device authorities called the “bat phone,” allegedly used by the prosecution’s witness to inform Walters about stock information, was never, in fact, used for that purpose.
Instead, the defense team contends that former Dean Foods board chairman Thomas C. Davis used the prepaid phone to procure the services of prostitutes, hiding those activities from his wife. Walters’ legal counsel also asserts the phone wasn’t in operation until December 2012, well after the reported trades, which occurred from May to October 2012.
“Even though the government knew or should have known that Mr. Davis’ testimony about using the bat phone between May and October 2012 was false — because he could not have received it until after that period — the government nonetheless elicited Mr. Davis’ perjurious testimony on direct examination,” the lawyers said in their latest papers filed with the Manhattan federal court.
Hotline Connection Runs Cold
Prosecutors used the “bat phone” as a centerpiece for their case against the 70-year-old Walters. The term came from the comic book Batman, where Commissioner Jim Gordon had a hotline that could contact the superhero 24 hours a day. They maintain that a similar situation existed between Davis and Walters.
Federal attorneys declared at the trial that the pair used the phone to discuss the company run by Davis, and that Walters would make trades based on their conversations. It is alleged he made more than $40 million from that information.
But the evidence that they provided at trial was for a time period before the phone in question allegedly existed. An FBI agent testified the two talked in 2008, and claimed that after the conversation, Walters bought 462,200 shares of the Dallas-based company’s stock.
Defense attorneys hammered the credibility of the star witness for the US, saying he couldn’t remember what color it was, while maintaining that it was really used to make his own sports bets and buy escorts.
But the jury was not convinced, and found Walters guilty on April 7 of 10 charges of securities fraud, wire fraud, and conspiracy. His lawyers then said they would contest the verdict.
If the appeal is granted, Walters would get a new trial. The defense team may ask Phil Mickelson to testify. The PGA Tour standout was implicated, but not charged, in the scheme. He made an alleged $1 million on the trades which he used to repay gambling debts to Walters. Mickelson avoided prosecution by giving the US government $1.3 million. He was not asked to appear at the first trial.
Much lies in the balance for Walters. If his appeal is denied, he faces a July 14 sentencing, and could receive as much as 20 years in prison.