FBI Agent Scrutinized for Role in Case Involving Phil Mickelson
(Bloomberg) -- An FBI agent is under Justice Department scrutiny after federal prosecutors said they found “incontrovertible evidence” he leaked confidential information about an insider-trading probe of Las Vegas gambler Billy Walters and golfer Phil Mickelson.
Walters, who was charged in May, has asked the judge in his case to determine whether prosecutors or Federal Bureau of Investigation agents were behind the leaks. published in in news reports in 2014, and should be punished. While prosecutors initially said there was no leak, they reversed course on Friday.
The disclosure comes as the agency is under fire for its handling of an investigation into then-Democratic presidential candidate Hillary Clinton’s use of a private e-mail server. In a speech to donors Thursday, Clinton said FBI Director James Comey’s decision to disclose a fresh investigation of her e-mails less than two weeks before the election helped cause her defeat, according to a recording of the event obtained by the New York Times.
“The agent admitted that he disclosed confidential information about the investigation to the New York Times and Wall Street Journal reporters who wrote the articles,” Assistant U.S. Attorney Joan Loughnane wrote to the judge about the Walters case.
Jim Margolin, a spokesman for Manhattan U.S. Attorney Preet Bharara, declined to comment on the government’s letter. Mickelson wasn’t charged in the case.
In preparation for a scheduled hearing next week, government lawyers said they interviewed agents and prosecutors involved in the Walters’ probe and reviewed e-mail and text messages. The agent on Dec. 6 “admitted that he was the significant source of confidential information leaked to reporters,” prosecutors said. The agent also said he’d concealed those communications from the U.S. Attorney’s office and FBI colleagues.
The agent, who isn’t identified in the government’s letter, has been referred to the FBI’s Office of Professional Responsibility and to the Justice Department’s Office of Inspector General for an internal investigation, prosecutors said. Prosecutors said the agent now refuses to speak to them without an attorney.
They also filed a report to U.S. District Court Judge P. Kevin Castel, under seal, for him to determine whether sanctions should be imposed on the government. One punishment is contempt of court, prosecutors said.
Barry Berke, a lawyer for Walters, said in a court filing Friday that prosecutors should be required to disclose the report to the defense.
“Now that the government’s initial position has proven to be untrue, the government seeks to deviate dramatically from the procedure by providing the new results of its investigation to the court” in a confidential report, he wrote. “This approach makes no sense, is contrary to bedrock principles in a criminal case and, not surprising, finds no support in the law.”
News reports about the probe in 2014 hamstrung the investigation of Walters, Mickelson and investor Carl Icahn’s attempt to buy Clorox Co. in 2011. Investigators were reviewing large option trades ahead of Icahn’s $10.2 billion offer for Clorox, as well as trading by Mickelson and Walters in Dean Foods Co. in 2012, prosecutors have said. Icahn wasn’t accused of wrongdoing and said in a 2014 interview that he had “never given out inside information.”
Walters, who built a Las Vegas-based sports-betting empire, has been seeking to force prosecutors to show more of their hand before his insider-trading trial. He’s accused of orchestrating an insider scheme reaping $43 million that also entangled Mickelson and Dean Foods’ former chairman Tom C. Davis, a golfing buddy and business partner.
Davis has pleaded guilty and is cooperating with the government. Mickelson was named in a Securities and Exchange Commission lawsuit and agreed to surrender profits he made on trades.
Adrienne Senatore, a spokeswoman for the FBI’s New York office, declined to comment on the government’s letter. A spokesman for Mickelson didn’t immediately return an e-mail seeking comment.
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