“It was sweet revenge,” Muriel Slatkin said about the mushrooming insider stock trading scandal swirling about Ivan F. Boesky, one of America’s wealthiest and best-known stock speculators. “Greedy” and “pompous,” she calls him--and worse.
Slatkin is not one of Wall Street’s injured. She is Boesky’s sister-in-law.
Her bitterness stems from a protracted family feud over the future of the fabled, pink Beverly Hills Hotel.
For much of this year, this landmark establishment has been the focal point of a court fight pitting Boesky and his wife, Seema, who holds 52% of the hotel’s stock, against Seema’s sister, Muriel, and her estranged husband, Burton Slatkin. The Slatkins and their two sons hold the remaining 48%.
So bitter is the feud between the Boeskys of New York and the Slatkins of Beverly Hills that Seema and Muriel haven’t spoken to each other for five years. What’s more, Muriel contends that she was “evicted” from her hotel office and her cabana 18 months ago by the Boeskys. She now lives in a house behind the hotel.
In recent years, the Slatkins have wanted to sell the hotel, but the Boeskys have balked, provoking litigation.
Now both sides have agreed to the sale--which will be held next Tuesday when eight bids are opened at the mid-town Manhattan offices of Brooks Harvey, the real estate arm of Morgan Stanley & Co., a New York investment banking firm.
The minimum bid under the sale’s ground rules must be $100 million, and slightly more than half of the sale’s proceeds will go to the Boeskys.
But the feud goes on.
Seema Boesky, 47, seven years younger than her sister, was not available for public comment. But she left no doubt about her outrage toward the Slatkins in a 36-page declaration filed in May in federal court in Los Angeles.
Seema charged the Slatkins with “offensive and abusive treatment” and “extortion” in the Slatkins’ efforts to put the famous landmark on the market.
Among the charges laid out in the Slatkins’ complaint is that the Boeskys used the money of Beverly Hills Hotel Corp. to engage in arbitrage, or speculation in takeover stocks, which resulted in losses to the hotel.
Charges leveled against Ivan Boesky by the U.S. attorney in Manhattan and the Securities and Exchange Commission grew out of Boesky’s hugely profitable arbitrage trading activities based on inside information not available to the public.
Ivan Boesky has agreed to pay a record $100-million fine to settle government charges of insider trading and has agreed to plead guilty to one criminal charge.
Muriel Slatkin claims that Seema is “a 25% partner” in all of her husband’s enterprises. Seema Boesky has not been charged with any wrongdoing in connection with any of her husband’s securities activities.
Muriel Slatkin said that Boesky disclosed this past summer to a meeting of the hotel’s board--consisting of the Slatkins and the Boeskys--that he was under investigation by the federal government.
The Slatkins’ complaint, filed last May, seeks the sale of the hotel and $100 million in damages. It was dismissed on Sept. 22 on a technicality.
To Seek $200 Million
But in an interview, Muriel Slatkin said she would seek to reinstate the case shortly and seek $200 million in damages.
Specifically, the litigation charged that:
- Both Ivan and Seema Boesky used $13 million of the hotel corporation’s funds “in high-risk arbitrage” in a 1982 anticipated takeover of Cities Service by Gulf Oil. Ultimately, the suit charged, the takeover was aborted “and Beverly Hills Hotel Corp. sustained a net loss of approximately $7.6 million.”
- The Boeskys used their majority control of the hotel to make a $100-million public stock offering in Vagabond Hotels “for the purpose of raising money for engaging in risk arbitrage.” Beverly Hills Hotel Corp. has among its assets a majority stock ownership of San Diego-based Northview Corp., which owns the motor inn chain.
- Ivan Boesky engaged in an “illegal scheme” to use Northview assets and other funds in 1985 to buy 2.6 million shares of CBS stock for more than $247 million.
- The Boeskys used their majority control to force a contribution of $750,000 to United Jewish Appeal chapters in New York and Los Angeles, which “precluded (the hotel) from making certain other charitable contributions in Los Angeles, the community where (it) does business.”
In refuting charges that they have financially damaged the hotel, Seema Boesky said in her declaration that any losses her husband might have sustained in using hotel money for stock speculation--such as the $7.6-million loss connected with the Cities Service venture--"have more than (been) offset.” For example, she said, Ivan Boesky made a $9.1-million profit for the hotel corporation from an 18-month investment of hotel cash in a Minneapolis television station.
The resort-like hotel complex, located on 16 acres of flowering gardens on Sunset Boulevard, was bought by Ben L. Silberstein, a Michigan real estate tycoon, in the 1950s. Silberstein then handed over control to his two daughters, Muriel and Seema, each sharing about 48%, with 4% of the hotel’s stock going to a nephew.
Around 1960, Burton Slatkin, already married to Muriel and an employee of Silberstein’s real estate firm in Michigan, took an executive position with the hotel and, in 1973, was elected its president and chief operating officer. A few years later, he became chief executive.
Seema Boesky claimed, however, that her father never thought much of Burton Slatkin’s ability to run a world-class hotel.
“My father’s poor opinion of Burton’s intellectual and managerial abilities, and his constant countermanding of Burton’s instructions to the staff, were notorious,” she said in her court declaration.
Burton Slatkin declined to be interviewed for this story.
But his estranged wife, Muriel, had a lot to say about the Boeskys.
“For a long time,” she alleged, the 49-year-old Boesky, the son of a Russian immigrant delicatessen owner in Detroit, “couldn’t keep a job. When my mother, Gertrude, died 10 years ago, Seema asked if she could have early distribution of (her mother’s) estate. She got $700,000 and used the (money to) get them off the ground.”
Acuired Nephew’s Holding
Her father thought Boesky had “the hide of a rhinoceros and the nerve of a burglar,” Muriel Slatkin said.
When Silberstein died in December, 1979, sources said, Ivan Boesky began taking an active interest in running the corporation. By 1981, he had acquired the 4% holding of the nephew, Royal Marks, and suddenly he and his wife, who had 48% of the stock, had majority control--or 52%.
Burton Slatkin was then stripped of his chief executive’s post.
Then Ivan Boesky transferred full control of the hotel to Seema a few weeks ago by giving her his 4% stock holding.
Seema Boesky has maintained that her husband’s expertise in stock speculation was to the hotel’s financial advantage.
“My husband’s skill . . . has earned him an international reputation,” she said in a court declaration.