Billy Walters, one of the most successful professional sports bettors ever, filed a lawsuit Thursday claiming an ex-FBI agent leaked confidential information to the media and that federal officials knew about the leaks and didn't try to stop them during an investigation that led to Walters's 2017 conviction on insider trading charges.
The complaint, filed in the U.S. Southern District of New York, alleges that in 2014, then-FBI agent David Chaves gave information to reporters for the New York Times and Wall Street Journal about an ongoing investigation into Walters, professional golfer Phil Mickelson, investor Carl Icahn and a series of stock trades involving now-bankrupt Dean Foods.
The lawsuit alleges that the FBI attempted to generate new information about the investigation by leaking stories to the media, while also maintaining a wiretap on Walters's phone to catch incriminating statements that might've been prompted by the news reports, a tactic known as "tickling the wire." According to the complaint, then-U.S. attorney Preet Bharara, one of six named defendants, and his deputies "took no steps to meaningfully investigate, impede, or remedy the unlawful conduct and prevent the harm caused to Walters."
During Walters's trial, Bharara acknowledged the leaks in a letter to the judge.
In 2017, a jury convicted Walters of 10 counts of conspiracy, securities fraud and wire fraud, and he was sentenced to five years in federal prison. Neither Mickelson nor Icahn was charged. Mickelson did, however, agree to pay back the nearly $1 million that he made buying Dean Foods stock in 2012, allegedly based on a tip from Walters, according to a 2016 Securities and Exchange Commission complaint.
In April, as the coronavirus pandemic took hold in the United States, Walters, 74, was released from prison and allowed to serve the remainder of his sentence at his Southern California home.
"The failure by Bharara and the Department of Justice to intercede for more than two years after learning of the leaks is reprehensible," Pierce O'Donnell, an attorney with Greenberg Glusker Fields Claman & Machtinger LLP who is representing Walters, said in a release announcing the suit. "Even worse, the prosecutors pretended they did not know about this egregious and unethical conduct until Mr. Walters and his attorneys convinced a judge to make them tell the truth."
The U.S. attorney's office for the Southern District of New York did not immediately respond to a request for comment from ESPN. Bharara and Chaves couldn't be reached for comment.
Walters is asking for a trial by jury to determine if any compensatory and punitive damages are owed to him.
Walters, who maintains his innocence, rose to prominence as an influential sports bettor in Las Vegas beginning in the 1980s. For decades, his bets would cause the odds to move at U.S. and international sportsbooks. He now describes himself as a retired sports bettor and a philanthropist.