Cooperation Paid Off : Boesky Won Concessions in Landmark Plea Bargain

Former stock speculator Ivan F. Boesky received relatively favorable treatment from federal prosecutors while negotiating the landmark plea bargain agreement that turned him into a cooperating witness in the Wall Street corruption probe, documents released last week show.

During intensive negotiations with the government last September, Boesky’s lawyers were able to extract a number of detailed concessions not granted to other Wall Street executives. The others later made their own plea bargain agreements with prosecutors, according to written agreements released by the government.

Boesky pleaded guilty in April to a single count of securities law violations, carrying a maximum five-year prison term. Last November, he paid the Securities and Exchange Commission a record $100 million to settle insider stock trading charges. Two other Wall Street executives implicated by Boesky, Martin A. Siegel and Boyd L. Jefferies, have pleaded guilty to crimes carrying a maximum sentence of 10 years in prison--twice Boesky’s exposure.

Manhattan U.S. Attorney Rudolph W. Giuliani, who supervised the criminal plea bargain agreements, said in an interview Thursday that the different treatment afforded Boesky “in essence indicates the value of cooperating quickly and early, rather than waiting to be caught before you cooperate.” Giuliani emphasized the breadth and importance of information provided by Boesky as a factor in the negotiations.

Significant Concessions

Some of the concessions obtained by Boesky’s lawyers during the plea bargain talks last fall remain of potential significance.

For example, Boesky is vulnerable to further prosecution for violating his plea agreement only if he “intentionally” fails to provide truthful information to government investigators. And if the government decides that Boesky has broken his deal, it must give advance notice to his lawyers and allow them to respond.

Such written protections were not provided to Siegel and Jefferies. They are vulnerable to further prosecution if they break their agreement in any way, whether intentionally or not. And prosecutors are not required to give them notice if they decide that the defendants are in violation.

Giuliani said he would bring new charges against any defendant only if he was convinced that a plea bargain agreement had been violated intentionally, but he acknowledged that the language in Boesky’s agreement is relatively favorable.

Others Fare Less Well

In addition, Boesky’s deal provides that if he honors his agreement, no information he gives the government will be used against him “in any other criminal prosecution.” But the Jefferies and Siegel agreements use much softer language. The two defendants are protected only from further prosecution by the Manhattan U.S. Attorney.

Moreover, Siegel was required to assure the government in writing that he “does not and has not had any foreign brokerage or bank accounts in his name or under his control.” Boesky was not required to do so to the Manhattan U.S. Attorney or the SEC.

“We were in the nice position of being able to assure the government that there were no foreign bank accounts,” said Jed S. Rakoff, Siegel’s attorney.

A special feature of Boesky’s deal is his protection from indictment by federal prosecutors outside New York. Whereas, Jefferies and Siegel made their deals only with Giuliani, Boesky’s agreement was endorsed at Giuliani’s request by U.S. Attorneys Joseph E. DiGenova and Robert C. Bonner, in Washington and Los Angeles, respectively.

Boesky’s lawyers sought those endorsements because the crime to which Boesky pleaded guilty allegedly occurred in New York, Washington and Los Angeles, according to people familiar with the case.