William T. “Billy” Walters Sentenced In Manhattan Federal Court For $43 Million Insider Trading Scheme

U. S. Attorney’s Office, Department of Justice

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that WILLIAM T. WALTERS, a/k/a “Billy,” was sentenced to five years in prison for conspiring to commit insider trading from at least 2008 through 2014, principally relating to securities of Dean Foods Company (“Dean Foods” or the “Company”). 

Acting U.S. Attorney Joon H. Kim said: “Billy Walters, a legendary sports gambler who mastered playing the odds, refused to play by the rules. As the evidence at trial revealed and as a unanimous jury found, Walters cheated his way to tens of millions in illegal profits, making massive, perfectly timed trades in Dean Foods based on confidential information stolen directly from the boardroom. Making millions in the stock market with a deck stacked in your favor leads to time in a federal penitentiary. For the integrity of our securities markets, that is the blunt lesson our insider trading prosecutions must teach.”

According to the allegations in the charging documents, evidence at trial, and statements made in court proceedings:

From 2008 through 2014, WALTERS and Thomas C. Davis, among others, participated in a scheme to commit insider trading principally related to securities of Dean Foods, a Fortune 500 company that is the largest processor and distributor of fresh milk in the United States.  Davis pled guilty to insider trading, perjury, and obstruction of justice charges on May 16, 2016, and cooperated with the investigation.

From 2001 until August 7, 2015, Davis served as a member of the Board of Directors of Dean Foods (the “Board”), and regularly possessed material, nonpublic information about Dean Foods, including about the Company’s financial performance and results, comprising quarterly earnings results; contemplated and actual corporate transactions; and other significant corporate and strategic developments (the “Inside Information”).  In furtherance of the scheme, Davis violated his duties of trust and confidence to Dean Foods by providing Inside Information to WALTERS in advance of public announcements.  WALTERS, knowing that Davis owed duties of trust and confidence to the Company, used the Inside Information to execute profitable trades in Dean Foods stock.  In total, WALTERS’ trading on the basis of Inside Information netted realized and unrealized profits of approximately $32 million and avoided additional losses of approximately $11 million.  In return for Davis providing the Inside Information to WALTERS, WALTERS, among other things, provided capital to Davis for joint business ventures and made two loans to Davis for approximately $1 million in total, which Davis largely did not repay.

In furtherance of the scheme, and to avoid detection by law enforcement, WALTERS provided Davis with a prepaid cellular phone to use when passing Inside Information to WALTERS.  Moreover, WALTERS further instructed Davis to use code words when discussing the Inside Information, including by referring to Dean Foods as the “Dallas Cowboys.”

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In addition to the prison term, WALTERS, 70, of Las Vegas, Nevada, was sentenced to one year of supervised release, and a $10 million fine.

Mr. Kim praised the work of the FBI and the Postal Inspection Service, and thanked the SEC and the Financial Industry Regulatory Authority (“FINRA”) for their assistance.  He also thanked the Las Vegas offices of the FBI and the Internal Revenue Service, Criminal Investigation Division.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Brooke E. Cucinella, Daniel S. Goldman, and Michael Ferrara are in charge of the prosecution.  

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