Speaker 1: A New York federal judge is demanding the Justice Department
Speaker 1: provide meaningful information about its investigation of an FBI agent
Speaker 1: who has been accused of leaking tips in the investigation
Speaker 1: into insider trading. In a high profile case, Las Vegas
Speaker 1: gambler Billy Walters was convicted in April on charges of
Speaker 1: making forty three million dollars from an insider scheme that
Speaker 1: also entangled pro golfer Phil Mulkison. Phil Mickelson, lawyers for Walters,
Speaker 1: tried unsuccessfully to have the case dismissed before trial, claiming
Speaker 1: FBI agent David Chavez leak details of his stock trading
Speaker 1: to a newspaper in order to breathe life into an
Speaker 1: investigation that was failing. Joining me is Professor Peter Haining,
Speaker 1: Heading of Wayne State University Law School, who was an
Speaker 1: expert on all things insider trading. Peter, this involved leaks
Speaker 1: of grand jury information. Why might that be more important
Speaker 1: to a judge than other things? Well, under the grand
Speaker 1: fury rules um everything related to that investigation must be
Speaker 1: kept confidential, and if there is any leak of information
Speaker 1: from either a prosecutor or here in this case, an
Speaker 1: agent that can subject the person to a contempt of
Speaker 1: court or even a separate criminal prosecution, perhaps for obstruction
Speaker 1: of justice. So grand jury leaks or something judges are
Speaker 1: very concerned about, and in this case especially the Justice
Speaker 1: Department's initial reaction was, hey, there were no leaks from
Speaker 1: our side, and then all of a sudden, now it
Speaker 1: turns out there was an FBI agent leaking to the
Speaker 1: New York Times in the Wall Street Journal. So the
Speaker 1: judge is clearly quite upset about this. Why do the
Speaker 1: FBI agent allegedly leak this, Well, it's not entirely clear that.
Speaker 1: Some of the talk has been that it was to
Speaker 1: put pressure on one or more of the targets, either
Speaker 1: the source of the information, Tom Davis, or perhaps Billy
Speaker 1: Walters himself. The government at the time also had up
Speaker 1: a wire tap, and maybe if the stories appeared in
Speaker 1: the press, they might make incriminating statements. It really isn't
Speaker 1: clear why the agent did it. I mean, clearly it
Speaker 1: was um illegal, uh and impromper. But you know what
Speaker 1: the motivation is and how leaking to the press is
Speaker 1: going to help an investigation. It's not easy to figure out.
Speaker 1: Judge Kevin Castell writes what the court learns is at
Speaker 1: the Section and the Inspector General are quote continuing continuing
Speaker 1: to investigate this matter, and they've obtained records and conducted
Speaker 1: multiple interviews and it's ongoing. That's it. So anyone who's
Speaker 1: been on the receiving end of government reports has to
Speaker 1: love that from a judge. Oh absolutely, I mean this
Speaker 1: is what what the Department of Justice tried to give, uh,
Speaker 1: Judge Castle is. Essentially, it's boiler plate response, Um, we're
Speaker 1: conducting an investigation, don't ask us anymore questions. Um. That
Speaker 1: this case has really gotten under the judge's skin, especially
Speaker 1: given the initial response, which was Judge, there's nothing to
Speaker 1: see here, and now there's actually a lot to see.
Speaker 1: So he is going to hold their feet to the fire. Absolutely.
Speaker 1: Is it more likely that they haven't been investigating this
Speaker 1: preferring to let it drop, or that they don't want
Speaker 1: to reveal what they have because it puts the FBI
Speaker 1: in a bad light. Well, I think the FBI is
Speaker 1: already in a pretty bad light. One, you know, purely
Speaker 1: speculative notion is that perhaps it was more than just
Speaker 1: this case in which the agent might have leaked information,
Speaker 1: So it could be a much wider investigation than we've
Speaker 1: had indicated. But again, that's something that the Justice Department
Speaker 1: is going to have to indicate at least a little
Speaker 1: bit to the judge, rather than, if you will, just
Speaker 1: blowing him off with a hey, judge, we're investigating. We'll
Speaker 1: get back to you later. Um, judge gave him two
Speaker 1: weeks to get back to him. So they're going to
Speaker 1: have to give a little bit more meat than the
Speaker 1: bare bones that they've provided at this point. Peter, the
Speaker 1: judge refused to dismiss the case based on this leak
Speaker 1: or alleged leak, But is it something that Walters could
Speaker 1: use in his appeal. He could try to bring it
Speaker 1: up that the problem is and Judge Castle noticed this
Speaker 1: or discussed this when he rejected the defense motion. He said,
Speaker 1: what's the prejudice, um, And you have to show prejudice
Speaker 1: from a violation by the government prosecutorial misconduct or here
Speaker 1: the FBI agent's misconduct. That it can't just be well,
Speaker 1: maybe they wouldn't have brought the case. Um. They need
Speaker 1: more than that, And so I don't see that as
Speaker 1: a strong argument on appeal. I think they're going to
Speaker 1: focus more on the issues at trial. And certainly questions
Speaker 1: about Tom Davis's credibility that the tipper who was the
Speaker 1: key government with and when he sentenced, how much time
Speaker 1: is Billy Walters facing. Well, government alleged that he made
Speaker 1: over forty million dollars and that will get you in
Speaker 1: range of about a five to seven year sentence, although
Speaker 1: that would be under the federal sentencing guidelines, which are
Speaker 1: only advisory. So I would certainly think though that Walters
Speaker 1: is going to be looking at, say a three to
Speaker 1: five year sentence. That's been about the norm for insider
Speaker 1: trading with that kind of dollar figure. So he's certainly
Speaker 1: looking at jail time, and they may ask for probation.
Speaker 1: Dependants often do, but I think that's very very unlikely.
Speaker 1: So that's the next step, and then the appeal and
Speaker 1: then the appeal. The sentencing will come in the next
Speaker 1: couple of months. Um the appeal will take probably about
Speaker 1: a year. I don't think we'll have any real resolution
Speaker 1: on the Walters convict and until later into eighteen. So
Speaker 1: the wheels of justice moved pretty slowly in this area.
Speaker 1: We certainly know that. Thank you, Peter Henning, Wayne State
Speaker 1: University Law School Professor