Boesky’s Lawyers Dispute Suit’s Claim About Assets

Attorneys for Ivan F. Boesky on Tuesday disputed a claim in federal court that the jailed arbitrager had at least $25 million left after paying $100 million to settle insider trading charges with the government.

The claim, made in papers filed in a civil suit, implies that Boesky’s lawyers misled the court when they said he was virtually bankrupt at the time he was sentenced in late 1987 to three years in a federal prison.

“The implication is outrageous and irresponsible,” said Leon Silverman, Boesky’s chief criminal lawyer, who prepared financial statements about Boesky that were presented to the government.

In October, 1986--one month before agreeing to plead guilty to a felony count and settle civil charges with the Securities and Exchange Commission--Boesky reported assets of $125.6 million.

Of those assets, Boesky’s lawyers said he paid $11 million in federal, state and local taxes. An additional $13 million in investments in Boesky partnerships became worthless when he agreed to plead guilty and pay $100 million in fines and restitution.

“If you do the arithmetic there ain’t nothing there,” Silverman said, adding that the figures exclude legal fees and other expenses.

The charge was made in papers filed in a pending civil suit filed in 1987 by investors in defunct Boesky partnerships against Boesky, his lawyers and the investment firm Drexel Burnham Lambert Inc.

The court papers claim that Boesky had $25 million, including $5 million in liquid assets, left over after paying the government.

George D. Reycraft, an attorney for the investors, declined to respond to the rebuttal by Boesky’s lawyers on the honesty of Boesky’s financial statements.

Boesky, 52, became eligible for parole Tuesday after serving nearly a year of his term at a minimum security prison in Lompoc.

But his lawyers are waiting to find out whether Drexel financier Michael Milken will be indicted on fraud and racketeering charges on Boesky-supplied information, as expected, before seeking Boesky’s release. They believe publicity surrounding Boesky’s insider trading case will not permit parole now.

Boesky’s attorneys said the partnerships are in liquidation proceedings.