Boesky Gets 3 Yrs., No Fine : Convicted of Biggest Scam in Wall St. History
Stock speculator Ivan F. Boesky was sentenced today to three years in prison and no fine for masterminding the biggest insider trading scandal in Wall Street history.
The prison term was the longest meted out so far in the unwinding revelations that have rocked the securities industry over two years.
Boesky pleaded guilty in April and has continued to give secret evidence of financial wrongdoing far beyond the scope of the single conspiracy count on which he was sentenced.
Despite pleas for leniency by Boesky’s attorneys, U.S. District Judge Morris E. Lasker told Boesky his offense “cannot go unpunished. . . . Its seriousness was too substantial merely to forgive and to forget.”
Boesky, 50, could have been sentenced to a maximum of five years and a $250,000 fine on his plea of guilty to one count of conspiracy to make false statements to the Securities and Exchange Commission.
Lasker said he was not imposing a fine because of the record $100-million civil penalty Boesky paid the SEC and “it is appropriate that your legitimate creditors be given a claim on your assets prior to that of the government.”
Faces Civil Lawsuits
Boesky, who faces a score of civil lawsuits, stood impassively and slightly stooped with his hands clasped behind his back as the judge spoke.
About 200 reporters, lawyers and spectators filled the third-floor courtroom.
Lasker said that while he is convinced Boesky would not repeat his offense or commit other crimes, “the time has come when it is totally unacceptable for courts to act as if prison is unthinkable for white-collar defendants but a matter of routine in other cases.”
“Breaking the law is breaking the law. Some kind of message must be sent to the business community that such activities cannot be wholly repaired simply by repaying people after the fact,” Lasker said.
It was agreed that Boesky will surrender to begin his sentence on March 24. The government and defense had asked that he not be imprisoned immediately because he is continuing to supply information to investigators.
Boesky admitted to conspiring with others, who have not been identified, to lie to the SEC regarding 1984 purchases of stock in Fischbach Corp., an electrical company.
Other Revelations Told
Prosecutors and defense attorney Leon Silverman have told Lasker in lengthy pre-sentencing memos that Boesky revealed his involvement in far more widespread illegal activity, including manipulating stock prices, unlawful takeover activity, undercapitalized broker-dealers and false record keeping.
The government made no specific sentencing recommendation, asking that Lasker weigh “both Boesky’s extensive criminal conduct and . . . his outstanding cooperation.”
Boesky, once considered Wall Street’s leading speculator in stocks of potential takeover targets, shocked the securities business on Nov. 14, 1986, by settling SEC civil insider trading charges.
Without admitting guilt or innocence, Boesky agreed to pay the record fine, half in civil penalties and the rest in disgorged profits from stock trades. He also accepted lifetime banishment from the industry.
Information supplied by Boesky, who secretly taped conversations with associates before his cooperation was revealed, led to guilty pleas by merger specialist Martin A. Siegel and former brokerage executive Boyd L. Jefferies.
