Billy Walters lawsuit says DOJ leaked, lied to convict him

Famed Las Vegas gambler Billy Walters, convicted of insider trading, believes federal authorities leaked phony information to the media and lied to judges in order to secure his prosecution, according to a lawsuit filed Thursday in New York.

Walters, who served more than half of a five-year prison sentence before he was released because of the coronavirus pandemic, alleged that authorities tried to get him to incriminate himself over a wiretap by planting news stories.

Federal prosecutors admitted in 2016, before Walters was indicted, that an FBI agent named David Chaves leaked confidential details of an investigation to reporters at The Wall Street Journal and The New York Times.

The lawsuit named Preet Bharara, former U.S. attorney for the Southern District of New York, and the Department of Justice, alleging prosecutors initially made no effort to stop the leaks or find the source. Walters went to trial and was found guilty in New York of masterminding a six-year insider trading scheme with former Dean Foods Co. Chairman Tom Davis. In addition to his prison sentence, Walters was fined $10 million.

“The failure by Bharara and the Department of Justice to intercede for more than two years after learning of the leaks is reprehensible,” an attorney for Walters, Pierce O’Donnell, with the Greenberg Glusker Fields Claman & Machtinger LLP law firm in Los Angeles, said in a news release. “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 52-page complaint did not specify monetary damages, which would be determined at a trial, but asked a judge to declare that authorities violated Walters’ constitutional rights.

Along with Bharara and Chaves, defendants in the suit were identified as former U.S. Attorneys Daniel Goldman, Richard Zabel and Telemachus Ksulis, and George Venizelos, the former assistant director of the FBI’s New York field office. The defendants could not be reached for comment Thursday.

“The primary relief Walters seeks here is a definitive judicial declaration that the individual Defendants conspired to rob him of due process,” the complaint stated. “This pattern of misconduct not only damaged Walters but undermined the constitutional assurance of the fundamental fairness of the federal criminal investigative apparatus.”

In December 2018, a federal appeals court dismissed Walters’ appeal of his conviction.

His wagers over four decades had helped him buy seven homes and a $20 million jet, while prosecutors said Walters made more than $40 million illegally trading the stock of Dallas-based Dean Foods.

Earlier this year, amid the COVID-19 outbreak, then 73-year-old Walters was allowed to serve the remainder of his sentence, which is set to expire Jan. 10, 2022, in home confinement in San Diego.

“While Walters maintains his innocence, this lawsuit does not seek to challenge his conviction of insider trading,” his lawyers wrote. “Walters has been tried and sentenced, and he is now paying his debt to society, even though the underlying allegations against him were based on false testimony and improperly procured evidence.”

Contact David Ferrara at dferrara@reviewjournal.com or 702-380-1039. Follow @randompoker on Twitter.