Dean Foods Co.’s former chairman, Tom C. Davis, and secretive Las Vegas gambler William “Billy” Walters were charged with an insider-trading scheme in which they communicated by prepaid cell phones and used code words to hide their crimes.

In a conspiracy that played out over six years, Walters told Davis to use "Dallas Cowboys" to refer to Dean Foods on the phone he was given. As investigators closed in on the pair, Davis tossed the phone into a body of water and attempted to destroy documents, according to prosecutors.

The two men were friendly with golfer Phil Mickelson, who wasn’t charged by prosecutors but asked by the U.S. Securities and Exchange Commission on Thursday to return some proceeds from transactions in which he profited.

Davis and Walters pair forged a friendship over "sports, golf, gambling and business" before Davis leaked information about Dean Foods’ financial outlook and performance, earnings, and the spin-off of an organic food distributor in 2012, Manhattan federal prosecutors said in announcing the case on Thursday.

In exchange, Walters offered business opportunities, investment capital and loans totaling almost $1 million to Davis, authorities said. No requests were made for repayment of the loans until newspaper reports surfaced about the investigation, and Walters then began to pay his debt.

Vegas Gambler

The investigation made headlines last year with news that the government was probing Davis, Walters and Mickelson ahead of billionaire investor Carl Icahn’s $10.2 billion offer in 2011 for Clorox Co.

Walters is a well-known Las Vegas gambler known to keep a low profile after earlier brushes with the law. He has shed little light on his winnings or net worth. In early 2011, he told CBS’s “60 Minutes” in a rare interview that he wagered millions of dollars on football and basketball and had never had a losing year as one of Vegas’s biggest sports bettors. He had a $20 million jet and seven homes, the program reported.

Around the same time, though, Walters owed as much as $15.25 million to the Federal Deposit Insurance Corp., stemming from the 2006 sale of the Stallion Mountain golf club in Las Vegas by a company he owned, according to documents in two lawsuits involving him. He won dismissal of three indictments from 1986 to 1999 charging him with conspiracy and money laundering, according to a document he filed in a civil lawsuit.

Walters and Davis brought others into their scheme, prosecutors said. In April 2010, Walters met Davis for lunch in Las Vegas, where Walters agreed that a third person who isn’t identified in court papers would give a $625,000 loan to Davis. In return, Davis passed a tip about Dean Foods to Walters, they said.