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Speaker 1: It's a high stakes trial, the biggest insider trading case

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Speaker 1: in years, but it has all the elements of a

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Speaker 1: movie script. Las Vegas sports betting legend Billy Walters is

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Speaker 1: accused of making forty three million dollars by trading on

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Speaker 1: inside tips given to him by Tom Davis, the former

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Speaker 1: chairman of fortune five hundred company Dean Foods. There was

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Speaker 1: a burner phone dubbed the bat Phone, secret codes, massive

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Speaker 1: gambling debts, and celebrity friends. In the sports world, star

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Speaker 1: golfer Phil Mickelson. In the financial world, billionaire investor Carl Icon.

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Speaker 1: Michoelson maybe out as a witness because the defense lawyer

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Speaker 1: told the trial judge Nicholson would invoke his Fifth Amendment

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Speaker 1: right against self incrimination if called. So, prosecutors are shifting

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Speaker 1: their focus. They want to show Walters engaged in suspicious

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Speaker 1: trading ahead of icons bid to buy Clarox. Neither Icon

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Speaker 1: nor Michelson is accused of wrongdoing. Joining us is Peter Henning,

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Speaker 1: professor at Wayne State University Law School, who is an

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Speaker 1: expert in insider trading. Peter Jury's love celebrity. So let's

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Speaker 1: start with Michelson. He isn't accused of wrongdoing, but he

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Speaker 1: did repay nearly a million dollars he made trading on

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Speaker 1: information he got from Walter's about Dean Foods. Give us

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Speaker 1: a little background on that and why he would take

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Speaker 1: the fifth. Well, what's interesting about it is he he

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Speaker 1: repaid the million dollars because he was referred to by

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Speaker 1: the SEC as what's known as a relief defendant, in

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Speaker 1: other words, someone who gained from the primary defendant, Billy

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Speaker 1: Walter's misconduct. So Michelson repaid the money but never said

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Speaker 1: that he engaged in the insider trading, and prosecutors never

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Speaker 1: brought charges against him, nor apparently did they reach a

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Speaker 1: deal to grant him immunity. So it was always a

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Speaker 1: possibility that he might testify and help bolster the claims

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Speaker 1: of Davis that he gave inside information to Walters. But

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Speaker 1: then we had the rather odd situation where Michelson said,

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Speaker 1: or his lawyer said, he's going to take the fifth,

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Speaker 1: which means there's at least some concern among the lawyers

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Speaker 1: that perhaps he was involved in the insider trading, or

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Speaker 1: he might have testified in a way that was inconsistent

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Speaker 1: with what he told FBI agents earlier. He was interviewed

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Speaker 1: at least twice, and so that of course could lead

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Speaker 1: to a false statement charge that without Michaelson, the prosecutors

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Speaker 1: are now going to have to really hang their hat

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Speaker 1: on Davis's testimony and then perhaps if they can get

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Speaker 1: in the Icon information. Yeah, let's talk about that Icon information.

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Speaker 1: So prosecutors, so that this case is all about the

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Speaker 1: Dean Foods trades. Um, the prosecutors say they want to

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Speaker 1: show that Walter's engaged in some suspicious trading ahead of

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Speaker 1: Icon's bid to buy Clorox. So, uh, neither of them

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Speaker 1: are accused of wrongdoing with regard to that to that

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Speaker 1: act position, how is it the prosecutors might be able

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Speaker 1: to bring in that sort of evidence Here, what they're

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Speaker 1: claiming is, and this is a classic phrase that a

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Speaker 1: lawyer uses, is that the defense opened the door to

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Speaker 1: bringing in other trades by Walter's that show that he

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Speaker 1: acted or traded at least suspiciously, that he had interactions

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Speaker 1: with Icon. And apparently they're going to try to use

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Speaker 1: a broker who a broker for Walters, who would testify

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Speaker 1: that Walter's referred were frequently to Icon. The problem is

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Speaker 1: judges don't like to bring in this kind of evidence

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Speaker 1: that is not directly implicated in the charges, that could

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Speaker 1: appear to be extraneous because it essentially creates a sideshow.

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Speaker 1: The defense is going to claim Icon didn't give him

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Speaker 1: any inside information, that he just learned maybe what Icon

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Speaker 1: might be doing and then made a good guess. So

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Speaker 1: my bet is the judge isn't going to let it in.

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Speaker 1: But that's still an open question. No ruling yet as

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Speaker 1: to whether information related to Icon can come in. Peter,

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Speaker 1: the trial judge, said he's skeptical, saying, if it's one

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Speaker 1: big pile of smoke, I'm not letting it in. But

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Speaker 1: sometimes smoke can help the prosecution a lot. And they

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Speaker 1: do have some phone records between Icon and Walter's and tweets.

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Speaker 1: Would any of that help them well, certainly. What they're

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Speaker 1: hoping to do. The prosecutors are hoping to do is

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Speaker 1: to show that Walters skated very close to the line

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Speaker 1: and that at least with the chlora excuse me, with

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Speaker 1: the Dean Foods trading, that he crossed over the line.

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Speaker 1: This is a way to try to bolster Tom Davis's

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Speaker 1: testimony because the Davis got beat up on cross examination.

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Speaker 1: He brings an awful lot of baggage into the courtroom.

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Speaker 1: Perhaps most importantly, that he's an admitted liar. And so

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Speaker 1: this is prosecutors saying, look over here, maybe this helps

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Speaker 1: to show that Walters was willing to trade on inside information.

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Speaker 1: The problem is, you know, where there's smoke, there isn't

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Speaker 1: always fire. And we'll see what Judge Castle does. My

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Speaker 1: bed is that he doesn't let it in. But even

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Speaker 1: if he does, it won't necessarily prove the prosecutor's case.

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Speaker 1: It will just bolster it a bit. Peter, there's this

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Speaker 1: issue of this burner phone phone that was supposedly used

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Speaker 1: to make the have these conversations. Um, prosecutors don't have that.

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Speaker 1: They don't have the phone. It feels a little bit

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Speaker 1: like you're in a murder trial and you don't have

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Speaker 1: the murder weapon. How big of a deal will that

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Speaker 1: be for for the prosecution here, Well, this is certainly

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Speaker 1: a circumstantial case. I mean that they do have Davis testifying,

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Speaker 1: although his credibility is open to question. You know, they're

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Speaker 1: going to use phone records and trading records and even

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Speaker 1: references here to the bat phone and uh the records

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Speaker 1: at support where the calls were made from all trying

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Speaker 1: to show what Walters did. But we've gotten used to

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Speaker 1: at least over the last few years, to wire taps,

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Speaker 1: and there are no wire taps here, and there's no

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Speaker 1: clear admission in a recording that inside information was used.

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Speaker 1: So the bat phone in a sense is a bit

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Speaker 1: like the murder weapon. At least it would have supported

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Speaker 1: Davis's claim. Instead, what we have is Davis's testimony. I

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Speaker 1: don't think we'll hear from Walters at trial. We have

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Speaker 1: the testimony of someone who said I destroyed evidence. Um,

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Speaker 1: that's not always helpful to the government. And also, uh,

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Speaker 1: Tom Davis also said that he admitted perjuring himself before

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Speaker 1: the sec But I'm always surprised, Peter and how jurors

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Speaker 1: leave these witnesses who make deals even when they admit

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Speaker 1: lying before. Oh, certainly, and this is not the first

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Speaker 1: time the government's dealt with this. And so what we

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Speaker 1: will hear, likely in the closing is the government saying, look,

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Speaker 1: you have to get someone who is involved in the misconduct.

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Speaker 1: The fact that he's a liar then doesn't mean that

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Speaker 1: he's lying now he's coming clean. Um. A lot of

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Speaker 1: this is going to ride on perhaps all of it

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Speaker 1: on the jury's perception of Davis. Are they going to

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Speaker 1: believe him? There is the circumstantial evidence, Is it enough

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Speaker 1: to add up to a conviction? That this is a

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Speaker 1: close case? Maybe one of the closest ones the U. S.

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Speaker 1: Attorney's Office has had in a while. Well, pret Perrero

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Speaker 1: will not be there to see what happens on this one.

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Speaker 1: Thank you so much. That's Professor Peter Henning of Wayne

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Speaker 1: State University Law School. That's it for this edition of

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Speaker 1: Bloomberg Law. Thanks to our technical director Reginald Basil and

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Speaker 1: our producer David Suckerman. We'll see you at once tomorrow

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Speaker 1: Wall Street Time here on Bloomberg Radio. This is Bloomberg