WASHINGTON, D.C. – Court documents prove U.S. Attorney Preet Bharara allowed FBI criminal leaks to the New York Times and Wall Street Journal to publish “fake news” cases as he fished to create an insider trading case against William T. “Billy” Walters, a multi-millionaire investor, sports gambler and philanthropist.

 The hand-delivered memorandum, dated December 22, 2016, from U.S. Attorney Preet Bharara to U.S. District Judge P. Kevin Castel, in the criminal case Bharara brought against Billy Walters in the case U.S. v. Walters, S1 16 Cr.338 (PKC), was unsealed and made public in a not-redacted form, revealing FBI Special Agent David Chaves in New York had engaged for nearly four years in criminal leaking that included secret grand jury information to New York Times and Wall Street Journal.

 Examination of the contents of that memorandum, available in full here on Scribd.com, makes clear that in April 2013, Chaves decided he would attempt to revive the dormant case against Walters by leaking key investigative information he was developing on Walters to two prominent national publications headquartered in New York City – namely, the New York Times and the Wall Street Journal.

Instead of being an FBI “nobody,” Chaves held important positions in the Criminal Division of the FBI’s New York Field Office, where he served as the FBI agent in charge of white-collar crime and the supervising investigator over the Walters’ insider-trading case.

In what can only be described as a “fishing expedition,” Bharara first believed he could catch Walters in what Bharara hoped he could construct into an insider trading case involving billionaire investor Carl Icahn and Clorox stock.

As early as 2011, the Securities and Exchange Commission (SEC) issued nearly three dozen grand jury subpoenas in an investigation of suspicious trading in the stock of Clorox, a company noted investor Carl Icahn had offered to purchase for $76.50 a share in a $10.2 billion dollar deal.  Although Walters’ trading in Clorox came to the attention of the SEC, no indictments or civil complaints ever resulted from the SEC’s 2011 investigation.

Between 2011 and 2013, the only information Bharara had was that Walters had bought millions of dollars of Clorox stock, but that was enough for FBI Special Agent David Chaves to see if he could make an insider trading case against Walters, with Bharara happy to prosecute Walters in the newspapers, even though the U.S. Attorney’s office had a “no evidence” case against Walters at that time.

Bharara outs reporter names

In late 2013, Chaves admitted to having lunch with Wall Street Journal reporter Susan Pulliam, during which Chaves also briefed her about his investigation of Walters.  At the lunch, Chaves asked Pulliam to let him know if she came across any information concerning Walters.  Chaves admitted that Pulliam “from time to time” would call him to describe what she was learning, with Chaves telling her to “check your sources” when she reported something about Walters that Chaves’ investigation suggested was incorrect.

Then, in April 2014, Chaves had another dinner, this time with three New York Times reporters, including Goldstein and Protess.  At that dinner, the reporters asked questions about the Walters investigation.  In response to their questions, Chaves told the Times reporters “the FBI was investigating a number of different stocks” in which Walters had made investments.

The record shows that Chaves after his initial dinner and lunch meetings, remained in continued contact with the New York Times and the Wall Street Journal reporters, that ultimately involved Chaves switching to his personal email account and to his personal cellphone. Bharara’s report also noted Chaves and the reporters left voicemail messages to reconnect when efforts by the reporters and the FBI Special Agent to speak by phone initially failed.

Preet Bharara’s December 2016 memorandum that the U.S. District Court ultimately forced to be released publicly in a non-redacted form, pleads predictably that the FBI was somehow unable to determine exactly what Chaves told the newspapers in his many contacts, including those conveyed via his personal email and his personal cellphone.

“[Special Agent David Chaves] has admitted that, in 2013 and 2014, he was a repeated source of information regarding the Investigation to as many as four reporters: Matthew Goldstein and Ben Protess at the Times, and Susan Pulliam and Michael Rothfeld at the Journal,” Bharara’s report to the court admitted.

Trial by newspaper begins

“Federal investigators are pursuing a major insider-trading probe involving finance, gambling and sports, examining the trading of investor Carl Icahn, golfer Phil Mickelson and Las Vegas bettor William ‘Billy’ Walters,” the first paragraph of the Wall Street Journal disclosed in an article published on May 30, 2014.

“The Federal Bureau of Investigation and the Securities and Exchange Commission are examining whether Mr. Mickelson and Mr. Walters traded illicitly on nonpublic information from Mr. Icahn about his investments in public companies, people briefed on the probe said,” the article continued, typically citing unnamed, anonymous “insider” sources.

“Investigators are examining whether over the past three years Mr. Icahn tipped Mr. Walters—famous in Las Vegas for his sports-betting acumen—about potentially market-moving investments by Mr. Icahn’s company,” the Wall Street Journal article continued.

“The FBI and SEC are examining whether Mr. Walters on at least one occasion passed a tip on to Mr. Mickelson, these people said, and are studying the two men’s trading patterns.”

The Wall Street Journal appeared to be publishing blindly the information they were being fed by FBI Agent Chaves, weaving in print the FBI’s unsubstantiated tale of how the three — Walters, Mickelson, and Icahn – were supposedly under FBI investigation for their participation in an insider-trading conspiracy.

Mr. Icahn met Mr. Walters, 67, through a mutual acquaintance when Mr. Icahn’s company owned the Stratosphere Hotel in Las Vegas, the newspaper noted. Mr. Icahn bought the Stratosphere in 1998 and sold it along with several other properties for $1.2 billion in 2008.

“The two struck up a friendship. Mr. Icahn was once an avid poker player and enjoys betting on football games,” the Wall Street Journal article explained. “The two have spoken about stocks.”

The article continued to observe that “Mr. Walters and Mr. Mickelson, 43, play golf together, said people familiar with their relationship. Sometimes Mr. Walters has suggested stocks for Mr. Mickelson to consider buying, one of the people said.”

FBI leads both newspapers down blind alley

The next day, May 31, 2014, the New York Times published an article by reporters Ben Protess and Matthew Goldstein, entitled “Authorities Find Insider Trading Case Tied to Phil Mikelson Is Slow to Take Shape.”

This article, quoting unnamed, anonymous “insider” sources was the second hit to the one-two punch delivered by the two newspapers.

“In the summer of 2011, a series of winning stock trades raised immediate red flags for financial regulators,” the New York Times article began.

“The traders – a cross-section of investors including the championship golfer Phil Mikelson and the high-rolling gambler and golf course owner William T Walters – collectively reaped several million dollars, according to people briefed on the matter who spoke anonymously because they were not authorized to discuss the investigation.”

The New York Times article focused on options contracts to buy Clorox stock that were purchased just days before the billionaire investor Carl C. Icahn announced an unsolicited takeover bid for the company that drove up the stock price.

“And trading records indicated that the bets came not just from Mr. Walters but also from at least one other investor connected to the golfing world, one of the people briefed on the matter said,” the New York Times article continued.  “That investor, another person said, is not now under investigation.”

The Times tied together the nexus between the supposed co-conspirator investors as follows: “As federal authorities examine whether Mr. Icahn leaked details of his Clorox bid to Mr. Walters, the people said, they are exploring a theory that Mr. Walters might have separately passed on other information to Mr. Mickelson.”

Yet the Times confirmed that the FBI investigation had stalled.  “And yet, nearly three years after the trades flashed some telltale signs of possible insider trading, a case has yet to materialize,” the newspaper noted.

Reading both articles carefully, it was clear FBI Special Agent David Chaves went to the newspapers precisely because his investigation had hit a brick wall, unable to produce the type of incriminating evidence that would justify a grand jury recommendation to prosecute.

The fact that the FBI investigation had gone nowhere is verified in that these two initial articles published in 2014 focused on Carl Icahn and Clorox stock – accusations that the FBI dropped altogether in bringing Walters to trial, while implicating golfer Phil Mickelson, who ultimately settled an SEC civil case involving his Dean Foods stock trades by paying a $1 million-dollar restitution and admitting no criminal culpability.

Nothing was ever proved in court that Mickelson knew Icahn, or ever owned any Clorox stock.

But, as the next article in the series will show, U.S. Attorney Preet Bharara and FBI Special Agent David Chaves did not to intend to stop here, despite realizing the Carl Icahn story about trading Clorox stock amounted to nothing more than “Fake News” planted with two supposedly top-notch newspapers satisfied to report FBI leaks in the apparent disregard of the professional standards that presided over genuine investigative journalism in previous decades.

This is the third in a series of exclusive Infowars.com reports detailing how government impropriety in U.S. Attorney Preet Bharara’s Manhattan office prosecution of William T. Walters has contaminated Special Counselor Robert Mueller’s “Russia Collusion” investigation – another FBI-driven investigation plagued by a systematic pattern of illegal leaking to the press.

 The first article, entitled “Why U.S. Attorney’s Criminal Leaks Threaten to Derail Mueller’s Russia Probe: FBI special agent leaked secret grand jury info to New York Times and Washington Post,” was published last on Oct. 12, 2017, and can be read here.

 The second article, entitled “Obama Lawyer Hid FBI Leaking to Get Insider Trading Conviction; Under Bharara, FBI in New York systematically leaked grand jury secrets to the New York Times and Wall Street Journal,” was published Monday, Oct. 16, 2017, and can be read here.

 

 

 

 

 


Related Articles


Comments