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