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United States v. Walters

United States District Court, S.D. New York

July 6, 2017

UNITED STATES OF AMERICA,
v.
WILLIAM WALTERS, Defendant.

          MEMORANDUM AND ORDER

          P. KEVIN CASTEL, UNITED STATES DISTRICT JUDGE

         Defendant William Walters moves the Court to set aside a jury's verdict and grant him a new trial pursuant to Rule 33, Fed. R. Crim. P. On April 7, 2017, a jury found Walters guilty on all counts of the indictment charging four counts of securities fraud, four counts of wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit wire fraud. At trial, the government presented voluminous documentary evidence, including phone and trading records, as well as testimony from various witnesses, including Tom Davis, a former member of the board of directors of Dean Foods, Co. (“Dean Foods”), and a government cooperator. On May 5, 2017, Walters moved for a new trial, arguing that the government knowingly introduced, and then failed to correct, material perjured testimony by Davis. For reasons to be explained, the motion is denied.

         BACKGROUND

         Numerous witnesses testified during the government's case, including multiple brokers who worked with Walters at various times relevant to the indictment, the former CEO and chairman of the board of Dean Foods, and another former CEO of Dean Foods. Trading data and phone records were offered by the government and admitted into evidence. This testimony and documentary evidence convincingly demonstrated a pattern: members of the Dean Foods Board of Directors, including Davis, would receive material, nonpublic information, closely followed by a phone call from Davis to Walters, closely followed by Walters initiating purchases or sales of Dean Foods stock consistent with the material, non-public information that had been provided to members of the board. Documentary evidence demonstrated that Walters extended approximately $1 million in loans to Davis, which Davis never fully repaid. Taken as a whole, this circumstantial evidence convincingly demonstrated an insider tipping scheme between Walters and Davis.

         Tom Davis, the former board member and then chairman of the board of Dean Foods, testified over five days regarding an insider trading scheme whereby he tipped Walters with material, non-public information related to Dean Foods. Davis testified that he received approximately $1 million in loans from Walters, a substantial portion of which were never paid back. This testimony corroborated the testimony of the other witnesses and the documentary evidence. Davis testified that he had provided Walters with material, non-public information regarding Dean Foods since at latest 2008. (Tr. at 674.) Davis, a sports gambling enthusiast, testified that in the beginning his motivations for providing Walters with the information were not thoroughly thought out, but that he was “enamored” with Walters, a famous sports gambler, and “wanted to develop a relationship with him.” (Tr. at 602-03, 766.) He traveled to Kentucky and California to golf with Walters. (Tr. 692-93, 717-19.) Davis testified that on two occasions he asked Walters for loans, which Walters extended and Davis never fully repaid. (Tr. 741-45, 757-58, 798-801.) Davis also testified that he provided material, non-public information regarding Darden Restaurants, Inc. to Walters in 2013. (Tr. 880, 886-87).

         Davis testified that in 2011 Walters provided him with a disposable cell phone, or “burner” phone, that Davis nicknamed the “bat phone, ” to be used for communications related to Dean Foods. (Tr. 834-36.) Davis testified that he disposed of the “bat phone” in a body of water near his home shortly after being contacted by the FBI in May 2014. (Tr. 899-901.) The “bat phone” was never recovered. (Tr. 1581.)

         Davis admitted in his testimony under oath that while he remembered certain events clearly, he did not recall the details of all his communications and interactions with Walters that related to Dean Foods. (Tr. 602, 616, 630-31, 651.) The government reiterated this in its summation to the jury. (Tr. 2755-56, 2921.)

         On cross-examination, Davis' veracity both on the stand and in his prior proffers to the government was repeatedly challenged by the defendant. (See e.g., Tr. 977 (“That was a lie, sir, wasn't it?”); Tr. at 1045 (“I ask you again, sir, that was a lie, wasn't it, sir?”); Tr. 981 (“Are you being as truthful about that as everything else in your testimony?”) Accusing Davis of fabricating his story, especially his description of his receipt and use of the “bat phone, ” factored prominently in both the defendant's opening and closing arguments. (Tr. 33-35, 2848-52, 2856-60.)

         LEGAL STANDARD

         Rule 33, Fed. R. Crim. P., provides that, “[u]pon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires.” Rule 33(a), Fed R. Crim. P. Although granting such a motion is within the court's discretion, “that discretion should be exercised sparingly.” United States v. Sanchez, 969 F.2d 1409, 1414 (2d Cir. 1992). “[M]otions for a new trial are disfavored in [the Second] Circuit.” United States v. Gambino, 59 F.3d 353, 364 (2d Cir. 1995). “The ultimate test is whether letting a guilty verdict stand would be a manifest injustice . . . . There must be a real concern that an innocent person may have been convicted.” United States v. Canova, 412 F.3d 331, 349 (2d Cir. 2005) (internal quotation marks omitted; omissions in original).

         “In order to be granted a new trial on the ground that a witness committed perjury, the defendant must show that (i) the witness actually committed perjury; (ii) the alleged perjury was material; (iii) the government knew or should have known of the perjury at [the] time of trial; and (iv) the perjured testimony remained undisclosed during trial.” United States v. Cromitie, 727 F.3d 194, 221 (2d Cir. 2013) (alteration in original).

         DISCUSSION

         I. Defendant has Presented Insufficient Evidence that Davis Committed Perjury.

         “A witness commits perjury if he gives false testimony concerning a material matter with the willful intent to provide false testimony, as distinguished from incorrect testimony resulting from confusion, mistake, or faulty memory. Simple inaccuracies or inconsistencies in testimony do not rise to the level of perjury.” United States v. Monteleone, 257 F.3d 210, ...


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