SHOCKING TALE OF GOVERNMENT CORRUPTION EXPOSED IN “TRIAL BY NEWSPAPER” SCANDAL
Here’s an interesting story about Obama-era appointees in the Justice Department going after a wealthy 71-year-old white man, “fake news” stories citing unnamed sources, and illegal FBI leaks of confidential information.
What’s interesting is that the story is NOT about Donald Trump. Get this…
History is littered with examples of persons unquestionably guilty of some of the most heinous crimes imaginable – including assault, rape and murder – being set free for a variety of reasons that range from insignificant paperwork errors to procedural technicalities – including failure to properly advise a suspect of his or her Miranda rights – to outright misconduct by government and law enforcement officials.
And this is at the very heart of the travesty of the political persecution being visited upon Las Vegas businessman and philanthropist Billy Walters, who was recently convicted of insider stock trading as a direct result of shocking, and fully-admitted, criminal misconduct by individuals associated with the United States Justice Department. The government’s obsessive pursuit of Walters spans more than three decades. It all started in
The government’s obsessive pursuit of Walters spans more than three decades.
It all started in 1985, when Walters and other successful sports bettors known as the “Computer Group” were indicted on “federal charges of conspiracy and illegal interstate transmission of wagering information.” All were ultimately acquitted in 1992, clearly giving the government a black eye. Then in 1996 authorities raided Walters’ Las Vegas sports betting
Then in 1996 authorities raided Walters’ Las Vegas sports betting business on suspicion of money laundering and seized $2.4 million in cash. The case was thrown out. The State of Nevada then tried to keep the confiscated money and convict Walters through two more grand jury indictments and a civil forfeiture lawsuit. The government lost every time, and in 2002 was forced to give Walters back his $2.4 million plus interest of more than $1 million.
Another huge black eye.
Then the Great Recession hit in 2008. And the Obama administration launched a crusade against Wall Street financiers, feeding the political left’s insatiable appetite to get “the rich” and inspiring the “Occupy Wall Street” protests against “the 1 percent.”
“The only problem is,” wrote Christopher Matthews for Time magazine in 2013, “those Wall Street crooks that the feds have been cracking down on aren’t those who actually caused the financial crisis, but a different breed of white collar criminal: inside traders.”
Indeed, the worst white collar crimes that financially knee-capped so many people during the economic crisis had absolutely nothing whatsoever to do with insider trading. That near-cataclysmic financial meltdown was caused by mortgage fraud and reckless Wall Street risk-takers, not inside traders.
And then there were true white collar rat-bastards such as Bernie Madoff.
But as Charles Gasparino – author of a book titled Circle of Friends – points out, insider trading cases were considered “sexy” in that they often included “wiretapped evidence of tipsters getting not just cash but lobsters and real sex in exchange for their services.”
“All of this was tailor-made for the Obama administration’s white-collar crime point man, Preet Bharara, the U.S. attorney from Manhattan,” Gasparino wrote in 2013.
“Bharara is a smart, capable, and ambitious prosecutor,” Gasparino continued. “His critics inside the Justice Department and in the legal community have also described him as a Rudy Giuliani on steroids when it comes to using the media to burnish his image and turn the crime of trading on ‘material nonpublic information’ into the Wall Street crime of the century.”
In this environment, Billy Walters again hit the government’s radar screen. And another political witch-hunt began.
In 2011, well-known and highly respected investor Carl Icahn began buying up stock in Clorox Company, leading the stock price to jump.
“Well-timed trading around the time of his bid,” reported the Wall Street Journal in 2014 (more on that story later), “caught the attention of investigators, who began digging into suspicious trading in Clorox stock.” Among those the government looked at: Billy Walters.
But the Walters investigation went nowhere. No evidence of wrongdoing. No incriminations on wiretapped conversations. No informants meeting in dark alleys. No suitcases stuffed with cash. No lobster dinners. No high-priced hookers. Nothing.
Enter FBI Supervisory Special Agent (SSA) David Chaves, head of the agency’s New York white-collar squad. Chaves decided to expand his investigation of Walters and began looking into trades Walters made with a company called Dean Foods. But like the Clorox investigation, he again hit a brick wall. There simply was no “there” there.
At that’s when Chaves decided to deploy the highly illegal tactic of anonymously leaking secret grand jury information to a pair of major newspapers – the aforementioned Wall Street Journal and the New York Times – clearly hoping public exposure of those fingered in print would loosen some tongues and scare targets into cooperating in a case Chaves himself described as “dormant.”
And make no mistake. These weren’t “alleged” leaks.
These were illegal and criminal quid pro quo leaks – leaks described by another non-leaking agent involved in the case as “deplorable and reprehensible” – which were often consummated over dinner (but no actual dancing) with reporters!
Leaks that a clueless Preet Bharara initially denied ever took place.
In a memorandum to District Court Judge Kevin Castel on October 16, 2016, Bharara dismissed accusations of government misconduct in leaking confidential information as “baseless” and described defense efforts to unmask the leaker as a “fishing expedition.”
“Walters argues that an agent or attorney for the Government leaked information about a grand jury investigation to the press in violation of (the law),” Preet wrote to the court. “Walters, however, cannot…demonstrate that the source of the information was ‘likely’ an agent or attorney for the Government.”
But just a few weeks later Bharara embarrassingly found himself wiping a brontosaurus-sized egg off his face when it was shockingly revealed that Walters’ so-called “fishing expedition” had actually landed a two-ton tuna named Government Agent David Chaves!
“On December 6, 2016, the Government interviewed Agent Chaves with FBI counsel present,” Bharara wrote in a follow-up memorandum to the court on January 30, 2017. “Agent Chaves admitted to providing confidential information about the investigation to the (Wall Street) Journal and (New York) Times dating back to in or about April 2013…”
“What we have here,” Bharara admitted to the court, “is unquestionable misconduct by an agent of the Government – the improper and inexcusable leaking of information to the media.”
Nevertheless, Bharara – desperate to add Walters’ scalp to his collection on the wall – argued that Chaves’ leaks did not rise to the level of “outrageous government misconduct” even though he, himself, had earlier described the leaks as “outrageous and harmful.”
Bharara went on to note that Chaves was interviewed a second time on December 8th and was scheduled for a third interview on December 13th. However, before that third interview took place, Chaves “lawyered up” and advised that he “would no longer meet with the government and would assert his Fifth Amendment privilege against self-incrimination.”
“To say I was shocked would be an accurate statement,” Judge Castel said upon learning of the extent of Chaves’ leaks. “It seems to me that, as a formal matter, as a judge, I would refer this to the U.S. Attorney’s office to review for possible prosecution as criminal contempt or as obstruction of justice.”
In fact, the Office of Inspector General in the Department of Justice has since “opened a criminal investigation into the leaks…including, but not limited to Agent Chaves’ conduct” – an investigation that to this day has yet to be concluded.
Indeed, one cannot escape the mind-blowing irony of Chaves illegally using insider information as a weapon in an effort to resurrect a dormant investigation into alleged illegal insider trading, as even Judge Castel himself observed. But it worked.
Meet Tom Davis.
Davis was on the board of directors for Dean Foods. He first met Walters back in the mid-1990s. They were golfing buddies and became good friends who regularly met and talked often about all manner of subjeƒcts, including golf, their families, charitable work, business deals, gambling and stock investments.
Agent Chaves’ illegally leaked stories eventually resulted in Davis being named as one of the subjects in the dormant Walters investigation.
After the leaked stories were published, Davis was questioned by the FBI as to whether or not he had provided Walters with any inside, non-public information on Dean Foods. His unambiguous response…
“I never provided Bill Walters any confidential information whatsoever. I’m certain of that. Whatever we discussed was typically available by analysts. . . . Bill Walters never asked me any leading questions about Dean Foods, so I felt like he respected the fact that I was on the board and didn’t want to put me in that kind of position so he never did.”
So much for that, right? Another dead end. Case closed.
But it turns out Tom Davis had a dark side that no one knew about. Not Billy Walters. Not the other board members and executives at Dean Foods. Not his business partners. Not his friends. Not even his family. As everyone was soon to find out, Tom Davis was actually one of the more loathsome, sub-human beings you’d ever want to meet.
Although totally unrelated to the Dean Foods/insider trading investigation, it was discovered that Davis embezzled $100,000 from a charity for battered women in order to pay off a gambling debt. And in efforts to cover up his crime he committed felony perjury and tax fraud.
As a result, Davis was now definitely going to jail. For a LONG time. Unless…
You see, the government had no real interest in Davis. They wanted Billy Walters. Desperately. So in a last-ditch effort to avoid prison time, Davis changed his story. He hoped that ratting Walters out would be his get-out-of-jail-free card and cut a deal with prosecutors to turn snitch.
“I’m not going to make any bones about it,” Davis declared in court testimony. “I was hoping that providing cooperation to the government would help me avoid going to jail, yes.”
And indeed his new story – which was the direct result of Agent Chaves’ illegally leaked stories – led to the indictment of Billy Walters for insider trading.
In his opening instructions to the jury at Walters’ federal trial in New York last March, Judge Castel said…
“Now, in deciding the facts of the case, you will have to decide on the credibility of the witnesses. How truthful and believable they are. . . .Were they candid, truthful, honest? Did they have a reason to falsify, exaggerate or distort their testimony?”
Defense attorney Barry Berke echoed the judge’s instruction, telling jurors in his opening statement that “the prosecution’s entire case…rises and falls over whether you can believe Tom Davis.” Prosecutor Michael Ferrara agreed, advising jurors that “the only relevant question for you in evaluating (Tom Davis’) testimony” is “whether you believe he’s telling the truth.”
Indeed, absent a single shred of other substantive, incriminating evidence, the government’s entire case did, in fact, rest on the testimony of this one man; a man desperately trying to avoid prison.
Now here are some of the pertinent facts the jury learned about Tom Davis to help them evaluate whether or not his testimony was truthful, honest and believable…
- He stole money from that battered women’s charity to pay off a huge gambling debt and lied to cover it up
- He stole money from that battered women’s charity to pay off a huge gambling debt and lied to cover it up
- He cheated on his taxes and fired an accountant who refused to help him cover up the embezzlement
- He committed fraud in a scheme to obtain insurance for his wife by claiming she was an employee of a company she never worked for
- He was a problem gambler who used illegal bookies in Dallas and got caught lying on the stand about the amounts he wagered
- He had a drinking problem; admitting during cross-examination that some of his health issues were “brought up by excessive use of alcohol.”
- He paid for prostitutes and “window shopped” for sex from various illegal escort services on multiple occasions in multiple cities
- He’s now working on his third divorce, due in part to admittedly cheating on all three wives
This is also a man who, as revealed in the court transcripts, was an accomplished, serial liar – spitting out, by the defense team’s count, at least 50 demonstrable whoppers during his trial testimony. Indeed, if this guy had a ham sandwich for lunch, and you took a photo of him eating that ham sandwich, he could still look you in the eye and swear with
Indeed, if this guy had a ham sandwich for lunch, and you took a photo of him eating that ham sandwich, he could still look you in the eye and swear with palpable conviction that he’d never eaten a ham sandwich in his life.
Here’s just one example of Tom Davis’ struggles with the truth during the trial…
Davis was asked if he proceeded to get a “marker” – a line of credit – from the Wynn Casino in the amount of $100,000 the night after a meeting with Walters in Las Vegas in April 2010. “I don’t recall,” Davis initially answered.
He was then shown documents detailing his activities at the Wynn, which resulted in this farcical back-and-forth bantering with defense counsel, Barry Berke…
Berke. “And sir, does that refresh your memory that after meeting with Mr. Walters, asking him for a loan, you went to the Wynn Hotel and Casino and had a marker for a hundred thousand dollars?”
Davis. “That’s not accurate, no.”
Berke: “You have a balance in your account when you were there on 4/9/2010 of a hundred thousand dollars, sir.”
Davis: “I drew several different markers there.”
Berke: “And was the total amount, sir, a hundred thousand dollars?”
Davis: “I never drew a marker for a hundred thousand dollars, no.”
Berke: “You drew a marker for $20,000, correct?”
Berke: “You drew a second marker for $20,000, correct?”
Berke: “You drew a third marker for $20,000, correct?”
Berke: “You drew a fourth marker for $20,000, correct?”
Berke: “And you drew a fifth marker for $20,000, correct?”
Berke: “And you would agree with me, sir, five times 20,000 is a hundred thousand, correct?”
Davis: “Yes, I would agree with that.”
The entire trial transcript is littered with similar exchanges, where Davis denies something or claims not to recall something, only to be proven disingenuous our outright dishonest when confronted with actual physical evidence in the form of documents, emails and other records.
In the end the prosecution had nothing but circumstantial evidence, conjecture about the timing of phone calls between Walters and Davis and trades Walters made, and Davis’ highly-doubtful, butt-covering claims made under duress that the two discussed non-public information about Dean Foods.
Not a single recorded conversation. Not a text message. Not an email. Not a voicemail. Not a letter. Not a fax. Not even a witness affidavit. Nothing.
In fact, the FBI twice wiretapped Walters’ phone. But Judge Castel refused to allow Walters’ defense team to bring up those wiretapped calls and inform the jury that the government had come up with absolutely nothing incriminating from them. Worse, Judge Castel even refused to allow the defense team to tell the jurors about the illegal and criminal FBI leaks that eventually led to Walters’ indictment.
So ultimately the question came down to this…
Was Tom Davis lying when he said he never gave Billy Walters any inside information when there was no reason for him to lie, or was he lying when he changed his story and said he DID give Billy Walters inside information when he was trying to avoid becoming somebody’s boy-toy in prison for the rest of his life?
This should have been a no-brainer.
Yet this New York jury – culled from the populace that gave birth to the “Occupy Wall Street” movement, not a jury of Mr. Walters’ peers – somehow found him guilty. And the court – despite the fact that this 71-year-old man poses no risk to society and poses no flight risk – has been ordered Walters’ into prison BEFORE he’s even had a chance to file an appeal.
This is a travesty of injustice from start to finish.
First, the government clearly singled out and targeted Mr. Walters with vengeance. And if the government can do it to him, it can do it to any of us.
Secondly, a government agent sworn to uphold the law broke the law in a desperate effort to resuscitate his dead investigation.
Under the circumstances, this case never should have seen the light of day. The judge should have thrown it out as soon as he learned of Agent Chaves’ conspiracy to leak confidential, secret grand jury information. Cases against murderers, rapists and thieves have been thrown out for a whole lot less.
Thirdly, any objective reading of the trial transcripts leads to no conclusion other than the government failed to prove beyond even a modicum of reasonable doubt that Tom Davis’ coerced claims of providing inside information were truthful.
And make no mistake, the successful persecution of Billy Walters has established the strategic template that enemies of President Donald Trump have been following in their obsessive effort to “get” him – including leaks to the New York Times by then-head of the FBI himself, James Comey, and fake news stories based on unnamed sources and likely government misconduct.
If they can get away with doing it to Bill Walters, they might be able to get away with doing it to Donald Trump. And they could certainly get away with doing it to you. Media propaganda. Secret surveillance. Government coercion and conspiracy. It’s what Orwellian dreams are made of. LW