From left, Carl Icahn, Phil Mickelson and William Walters.
It’s a long, hot summer for billionaire investor Carl Icahn, golf legend Phil Mickelson and Las Vegas gambling hotshot William “Billy” Walters.
The high-profile trio could face white-collar prison — that’s low-security Club Fed, sans cocktails — if investigators finally nail them in their long, drawn-out insider-trading probe, The Post has learned.
At stake, people familiar with the matter say, is the continuing investigation by the FBI, Manhattan federal prosecutors and the Securities and Exchange Commission into suspicious trading in the public stock of two companies: Clorox and Dean Foods.
The Feds have been investigating whether Mickelson and Walters illegally traded on non-public information from activist investor Icahn, a probe that initially centered on Clorox and later expanded to Dean Foods.
“Certainly regulators are looking for scalps,” said Jeff Smith, a partner at DeCotiis, Fitzpatrick & Cole who has defended corporate clients in a wide range of cases brought by federal regulators.
“Still, the inquiry is reasonable and could have some importance in extending the regulators’ reach to those not clearly within the traditional insider definition,” Smith said.
In early June, claims were dismissed that Mickelson traded in Clorox back in 2011 — just as Icahn commenced his $10.2 billion offer for Clorox.
That unsolicited takeover bid resulted in a huge spike in the price of Clorox and it drew attention from regulators who’d electronically uncovered a related spate of suspicious trading, say people familiar with the matter. And it also unleashed the investigation that persists.
The Feds continue to pursue Icahn and Walters over trading in Clorox, people following the case say. And Mickelson and Walters are said to face regulatory scrutiny over separate but suspiciously timed trades they made in Dean Foods in 2012 — not long before that stock skyrocketed.
Now legal experts are staring into the crystal ball.
“If the SEC brings a civil case against the three, it can seek disgorgement of profits, civil fines and injunctive relief — prohibiting future violations of the securities laws, as well as barring the individual from serving as a corporate director or officer or from serving in the industry,” said attorney Lathrop Nelson of Montgomery McCracken’s white-collar and government investigations practice.
“Assuming that the government can bring a successful criminal action against them — a term of imprisonment is not out of the question,” Nelson said, though unlikely. experts say.
Federal regulators declined comment for this story.
The intense probe has not yet uncovered any wrongdoing — and Icahn, Mickelson and Walters have previously denied any lawbreaking in the case. Not one of these VIPs has been charged and ultimately, say people following the case, the investigation could collapse.
“It is a high-profile case,” said former SEC Commissioner Richard Roberts. “In my experience, enforcement people, the SEC and Justice, don’t move very fast. The higher the profile, they slow down that much more — and that may be because they are battling very high-priced defense counsel.”
Money is hardly an object for those involved.
Icahn, 78, a native of Far Rockaway, Queens, graduated from Princeton and is now worth a cool $24 billion.
Mickelson, 43, has had a lucrative sports career with an estimated worth of $180 million and he’s a three-time Masters champion.
The silver-haired Walters, 67, grew up in Kentucky, rising to fame as a poker player and later successfully parlaying his gains into a sports betting career. He has reportedly made as much as $15 million a year in Las Vegas.
Do these three men know each other? Icahn does not personally know Mickelson, people say.
Icahn, though, may have rubbed shoulders with Walters through Icahn’s big-time Las Vegas’ investments. And Michelson and Walters have taken part together in the Pebble Beach Pro Am golf tournament.
The case plays out like a high-class financial thriller with its riveting moments.
Mickelson has been publicly accosted by FBI agents on several occasions. Two agents stopped him earlier this year for questioning at the Memorial Tournament in Ohio after he wrapped up a round with two double bogeys, sources say.
And Icahn has greeted the case lately with gallows humor. “I’m tired of my friends … asking me for free golf lessons,” he has joked.
Still, if the Feds nail the trio, it’s no joking matter.
