Walters wins a round in insider trading case: Will it matter?By John L. SmithDecember 20, 2016 at 10:00 amOn the way to making its insider trading case against Las Vegas gambler and developer Bill Walters, the FBI now has to address an insider problem of its own.In a letter to presiding U.S. District Judge Kevin Castel of the Southern District of New York, U.S. Attorney Preet Bharara was compelled to admit the defendant’s contention that confidential investigative information was leaked by an FBI agent to reporters for The Wall Street Journal and The New York Times. The defense recently requested a hearing to discuss the issue.“On December 6, 2016, during an interview conducted by the U.S. Attorney’s Office (USAO) in preparation for the hearing in the Court ordered in this case, a Special Agent with the Federal Bureau of Investigation admitted that he was a significant source of confidential information leaked to reporters at both the Wall Street Journal and the New York Times about the underlying investigation,” Bharara wrote. “The Agent further admitted that, prior to his December 6 interview, he had hidden those communications with the press from both the USAO and others within the FBI.”The letter to the judge, dated Dec. 16, goes on to note that the prosecution and the FBI regard the issue “with utmost seriousness,” and “it is now an incontrovertible fact that there were FBI leaks of confidential information to the press regarding this information.” In addition to the interviews and admissions, the office also collected damning texts and emails.The FBI takes this sort of thing seriously. The matter was forwarded to the Bureau’s Office of Professional Responsibility with the U.S. Attorney handing off the development to the Office of Inspector General for the Department of Justice.Now the agent has lawyered up.The Walters investigation came to light in several Journal and Times articles published in May and June 2014. According to the government’s admission, “The articles reported sensitive and confidential details, including trades being examined, records being analyzed, the name of an individual approached by the FBI, and the supposed targets of the investigation. The articles noted that publicity could jeopardize any potential case and hamper efforts to collect evidence.”On May 19, an indictment was unsealed charging Walters with a dozen felonies related to his many stock deals involving Dean Foods. Thomas Davis, a former chairman of the company, already has pleaded guilty in the case and has agreed to cooperate. Professional golfer Phil Mickelson, who has admitted benefiting from some of the confidential information provided by Davis, was not criminally charged in the case but was named as a “relief defendant” in a separate civil investigation by the Securities and Exchange Commission. Mickelson, a three-time Masters champ who admitted he’d lost money to Walters after placing bets with him, agreed to pay back $1.03 million in ill-gotten gains as part of his settlement.The full meaning of this development on the entirety of the criminal charges against Walters remains uncertain. The violation could result in a contempt citation being issued by the judge, who has wide latitude, and can call for further fact-finding as he deems necessary.Although it’s clear Bharara would prefer the judge review this painful distraction outside the media glare, given the theme of the inquiry it’s probably best that the press be kept informed. Walters is accused of receiving insider information from Davis from 2008 to 2014, a time it’s alleged he made $32 million and avoided $11 million in trading losses, according to the indictment.He surely understands the odds by now. He’s survived multiple state and federal criminal problems of his multimillion-dollar sports betting activity and has been acquitted and seen charges dismissed in cases alleging illegal gambling and money laundering.Given the evidence suggested in the indictment, the cooperation of Davis and the admissions of Mickelson,whether the FBI leak development proves more damaging to the case than embarrassing to the agent remains to be seen.John L. Smith is a longtime Las Vegas journalist and author. Contact him at email@example.com. On Twitter: @jlnevadasmith.