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FBI agent leaked insider trading probe involving Las Vegas gambler Bill Walters, Phil Mickelson

An FBI agent has admitted to divulging confidential information to reporters covering the insider-trading probe of renowned Las Vegas gambler Bill Walters, federal prosecutors said Friday.

In a letter to U.S. District Judge Kevin Castel in New York, prosecutors pursuing charges against Walters said that at least one agent confessed to being “a significant source” for The Wall Street Journal and The New York Times and never told colleagues about what he revealed to the journalists.

Walters, who was charged in May, had asked the judge to determine the source of the leaks and whether anyone should be punished. His lawyers have contended the probe was leaked to breathe life into it.

Las Vegas attorney Richard Wright, who represents Walters, declined comment to the Review-Journal on Friday.

Prosecutors had initially denied the leak, but said that during an interview last week the agent acknowledged being the source of the information.

“It is now an incontrovertible fact that there were FBI leaks of confidential information to the press regarding this investigation,” the letter states. “The potential of a government leak caused great distress and anger at all levels” within the U.S. Attorney’s Office and the FBI.

Manhattan U.S. Attorney Preet Bharara’s office has referred the matter to the U.S. Justice Department’s Office of Inspector General, and the Federal Bureau of Investigation has reported the agent to its Office of Professional Responsibility, according to the letter.

While Walters’ lawyers have said Castel could impose a number of sanctions, prosecutors on Friday said the remedy available was to hold the agent in contempt of court.

The government is now trying to determine whether rules regarding grand jury secrecy were violated. The agent in question, who was not named in the letter, has refused to speak with federal prosecutors without a lawyer.

On May 18, the FBI arrested the famed sports bettor at his Bali Hai Golf Club on allegations that he illegally traded on tips supplied by Thomas Davis, the former chairman of Dean Foods Co., who has pleaded guilty and is cooperating with prosecutors. The government’s investigation also focused on professional golfer Phil Mickelson, but he was never charged in the case.

Between May and June 2014, The Wall Street Journal and The New York Times reported seven stories, which included “sensitive and confidential details” about the investigation that led to Walter’s indictment.

In September, Walters’ lawyers wrote in court papers that they believed “a member of the government’s team with complete knowledge of all aspects of the grand jury’s investigation was feeding information to the press in an apparent effort to generate incriminating calls on the wiretap that could be used to bolster the government’s insubstantial case against Mr. Walters.”

Last month, Castel wrote in an order that the newspaper articles were “suggestive of a government leak” and set a Dec. 21 hearing to address the communications.

In May, after being released on $1 million bond, Walters told the Review-Journal that he does not expect to spend time in a federal prison.

“It’s quite clear in my past what the facts have been,” he said. “I’ve been accused of those things, but the facts have come out, and I’ve been exonerated every time. That’s just the truth.”

Contact David Ferrara at dferrara@reviewjournal.com or 702-380-1039. Follow @randompoker on Twitter.

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