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Boesky Takes Stand, Speaks Publicly For First Time in Years

May 22, 1990

NEW YORK (AP) _ Ivan F. Boesky took the witness stand today for the first time since the convicted ex-speculator struck a plea deal in 1986, testifying against former friend John A. Mulheren Jr. on securities fraud charges.

Boesky, center of the biggest insider trading scandal in Wall Street history, made his entrance through a back door of Manhattan federal court, where he faced Mulheren and a packed courtroom. It was Boesky’s first public appearance since he was released early from a three-year prison term last month.

Clean-shaven, white hair cropped short, Boesky wore a charcoal gray suit, white shirt and dark tie. He calmly answered questions posed by Assistant U.S. Attorney Scott Gilbert. Mulheren, a well-known and eccentric speculator who wears casual clothes, sat at the defense table several yards away.

Asked to identify Mulheren, Boesky pointed at him and said, ″the man in the pink shirt.″

Boesky is the government’s main witness against Mulheren on charges of stock manipulation and other securities fraud violations. His testimony was expected to be the high point of the trial.

The two once were close friends but Mulheren became enraged when he learned Boesky had implicated him in wrongdoing a few years ago. At one point Mulheren allegedly plotted to assassinate him with an assault rifle. Weapons charges against Mulheren subsequently were dropped.

Under Gilbert’s questioning, Boesky recounted his youth as the son of a Detroit restaurant owner, college, law school and Wall Street career that began in the 1970s. Boesky said he’d known Mulheren for 10 years and the defendant once helped his stock trading company avert collapse.

The biggest drama was yet to come, when Mulheren’s defense lawyer Thomas Puccio was expected to grill Boesky about his own credibility and criminal past, seeking to discredit his client’s chief accuser.

Earlier, a former aide to Boesky said he authorized a plan to mislead the former speculator about the amount of capital in his company in an effort to curb Boesky’s voracious appetite for buying stocks.

″Ivan liked to buy stocks and he didn’t like to sell stocks,″ Reid Nagle, one-time senior vice president for Ivan Boesky & Co., said in testimony Monday. Boesky paid $100 million in penalties and pleaded guilty to one felony to settle the biggest insider trading case ever. In exchange he gave government investigators incriminating information about a number of others.

The biggest victims of Boesky’s information were the now-defunct investment banking company Drexel Burnham Lambert Inc. and its junk-bond trading specialist Michael Milken. Both have pleaded guilty to numerous fraud charges that include fines with a combined total exceeding $1 billion.

Mulheren, 40, is accused of manipulating one stock price and concealing ownership of other stocks to help Boesky cheat on his taxes and evade federal securities laws.

Nagle did not testify about any dealings with Mulheren or his co-defendant, Leonard DiStefano, 34, a former trader at Mulheren’s firm, Jamie Securities, charged with two counts of conspiracy and record-keeping violations.

Mulheren is charged with 41 counts of conspiracy, securities fraud, mail fraud and violating federal record-keeping laws. He faces a maximum five years in prison and $250,000 fine on each count.

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