Former Dean Foods Co. Chairman Tom C. Davis liked to live on the edge, according to his predecessor — in one case allegedly dropping $150,000 on a hand of blackjack.
Gregg Engles, former chairman and founder of Dean Foods Co., also told a Manhattan jury at the insider-trading trial of gambler Billy Walters that he knew Davis had an appetite for risk.
Walters is accused of profiting from inside tips he got from Davis to the tune of $43 million over a six-year span. In exchange, the gambler helped out his golfing and business pal, who got into financial straits with his luxurious lifestyle and gambling habit, by lending Davis almost $1 million, prosecutors said.
The government began laying out its case against Walters with Engles’s testimony. He spent 2 1/2 days describing the operations of Dean Foods, the milk industry, the effects of drought on dairy prices and the lead up to the spinoff of WhiteWave, a unit that specialized in plant-based milks made from soy and almonds. The announcement of the spinoff on Aug. 7, 2012, sparked a 41 percent rise in the price of Dean Foods shares. Walters pocketed $17.1 million by trading the shares ahead of the announcement, according to prosecutors.
Engles said he knew Walters was a friend of Davis, but testified that he wasn’t aware Davis had leaked secrets from the board room until he learned of the charges.
Walters’s lawyer, Barry Berke, suggested there were plenty of leaks and Dean officials publicly discussed spinning off WhiteWave with analysts and investors, including SAC Capital Advisors.
On cross-examination, Berke also brought up Davis’s penchant for risk.
He asked Engles if he had known about Davis’s $150,000 loss at the blackjack table.
“He was an honest gambler,” Engles responded.
Berke also played for the jury an excerpt of a TV appearance Engles made on Jim Cramer’s “Mad Money” show on CNBC on May 31, 2012, when he discussed the likelihood of a spinoff.
The two also talked about the risks involved in the dairy business, including droughts and the price of diesel needed to truck milk. And, somehow a gambling metaphor made its way into that conversation too.
“You’re just like a gambler losing every single time!” Cramer groaned.
“We had a tough hand,” Engles replied.