September 12, 2017 / 6:44 PM / 10 months ago

U.S. gambler Walters asks to stay free during insider trading appeal

NEW YORK, Sept 12 (Reuters) - A lawyer for famed Las Vegas sports gambler William "Billy" Walters on Tuesday urged a U.S. appeals court to let his client remain free while he appeals his conviction and five-year prison sentence for insider trading.

Defense attorney Alexandra Shapiro told a three-judge panel of the U.S. Court of Appeals for the 2nd Circuit in Manhattan that prosecutors' had engaged in a "concerted, extensive and illegal campaign" of leaks to the media in Walters' case.

Shapiro also said evidence showed the government's star witness, former Dean Foods co-chairman Tom Davis, lied on the stand when he told jurors he fed Walters tips about the company using a pre-paid "burner" cellphone dubbed the "Batphone."

Shapiro said those "substantial issues" meant Walters should be allowed to remain free during his appeal.

Walters was accused of making more than $43 million in profits and avoiding losses from 2008 to 2014, mostly from stock tips from Davis about Dean Foods. Walters was convicted in April of securities fraud, wire fraud and conspiracy following a four-week trial.

In July, U.S. District Judge Kevin Castel ordered Walters to surrender on Oct. 10 to begin serving his sentence.

Assistant U.S. Attorney Brooke Cucinella, arguing for the prosecution on Tuesday, noted that Castel had already considered both of the issues raised by Shapiro.

Prosecutors admitted before Walters' trial earlier this year that FBI agent David Chaves leaked information about a grand jury investigation of Walters to the media. The leaks have prompted a criminal investigation by the Justice Department’s Office of the Inspector General.

Walters' attorneys argued the leaks were meant to revive a dormant investigation that would otherwise never have resulted in criminal charges. Shapiro argued on Tuesday that press reports about the investigation put pressure on Davis to testify for the prosecution and fabricate a story about tipping Walters.

Castel ruled before the trial that the leaks were not grounds for dismissing the charges.

The case has drawn attention because of prosecutors' claim that Walters passed an insider tip about Dean Foods to champion golfer Phil Mickelson. The golfer was not charged with a crime but did agree to surrender money he made trading in the company's stock to U.S. securities regulators.

It also emerged during the trial that Walters often talked about investing with billionaire investor Carl Icahn, who also was not charged with any crime. (Reporting by Brendan Pierson in New York; Editing by Paul Simao)

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