Former Dean Foods Chairman Gets Two Years for Insider Trading Scheme

Thomas Davis, a former chairman of dairy processing company Dean Foods Co, was sentenced on Thursday to two years in prison after pleading guilty to passing insider information to sports gambler William “Billy” Walters.

Davis was sentenced by U.S. District Judge Kevin Castel in Manhattan, who also ordered him to pay about $8 million in restitution, according to Nicholas Biase, a spokesman for federal prosecutors.

Lawyers for Davis could not immediately be reached for comment.

Davis served as prosecutors’ key witness in Walters’ insider trading trial earlier this year, testifying that he gave Walters insider information for years using coded messages and a pre-paid “burner” cell phone that the two called the “bat phone.”

Walters was convicted in April and sentenced by Castel to five years in prison in July. He began serving that sentence earlier this month, though he is continuing to pursue an appeal.

Davis told jurors during Walters’ trial that the insider tips he gave Walters included advance notice of quarterly earnings reports and of Dean Foods’ 2012 spinoff of part of its business as WhiteWave Foods Co.

Davis testified that in 2010, facing financial difficulties, he asked Walters for a loan, and that Walters eventually arranged one, for $625,000.

Prosecutors have said Walters made more than $43 million through the insider trading scheme. Walters has denied the charges. His lawyer, Barry Berke, said during the trial that Davis fabricated his story, and that the “bat phone” never existed.

The case has drawn attention because Walters has associated with billionaire investor Carl Icahn and champion golfer Phil Mickelson.

Neither was charged with wrongdoing, though Mickelson, who once owed gambling debts to Walters, agreed in May 2016 to settle a Securities and Exchange Commission civil case by forfeiting $1.03 million he made based on a tip from Walters.