GAF Case Ends in Mistrial for a Second Time

A federal judge declared a second mistrial in the GAF Corp. stock market manipulation case, this time after jurors exhausted from 12 days of deliberations threw in the towel and said they had no hope of reaching a verdict.

Benito Romano, the acting U.S. attorney in Manhattan, immediately said his office would try the case a third time. U.S. District Judge Mary Johnson Lowe had declared a mistrial Jan. 10 in the first trial after she ruled that prosecutors had improperly withheld a piece of evidence from defense attorneys.

Jurors in the trial that ended Wednesday had sent a note Saturday night saying they were deadlocked 11 to 1 on the eight criminal counts. After Judge Lowe urged them to try again, they continued for three more days. But on Wednesday, jurors sent another note saying they were split three ways, with some jurors voting for conviction, others for acquittal and still others undecided. After the judge asked them if they would be willing to keep on trying, they said they had voted 7 to 5 to give up.

Based on several indications, lawyers in the case assumed that the majority favored conviction. But jurors, worn out and apparently upset, refused to discuss the case with reporters after the mistrial was declared. Jury foreman Leslie Nuchow said the jurors had agreed among themselves not to answer questions from the press. She declined to say why. Juror Irene Korchinski also refused to discuss the case, and another juror hung up when a reporter telephoned.

GAF and its vice chairman, James T. Sherwin, 55, had been accused of hiring the Los Angeles-based brokerage firm Jefferies & Co. to illegally bid up the price of Union Carbide stock in late October, 1986, allegedly to help GAF get a better price for several million Carbide shares that it was preparing to sell off.

Sherwin, his wife and daughters had been present in the courtroom throughout the deliberations. Looking pale and drawn after 12 consecutive days of waiting in the courtroom, Sherwin and his wife, Hiroko, said they were glad that the ordeal was over--at least for the moment.

A Long Wait

Sherwin described the waiting as “agony” but said he expected to return to his office at the Wayne, N.J., chemical and building products concern today. Asked what he thought about the prospect of being tried a third time, Sherwin said: “I’m not even going to start to think about it.”

GAF, in an official statement, reacted sharply to the prospect of yet another trial. “There is a time when prosecution becomes persecution,” a spokesman said. “Jim Sherwin and GAF have now been subjected to two lengthy and costly trials, and we would hope that after calm and sober reflection the government will conclude that a third trial is not warranted or fair nor would serve any useful purpose.”

The spokesman declined to estimate how much has been spent so far to defend Sherwin and the company. The U.S. Attorney’s Office in Manhattan said it didn’t have any estimate how much the prosecution of the case has cost taxpayers.

Romano said the government would go ahead with a third trial because “we still have a great deal of faith in our evidence in the case.” He added that “we feel the right thing to do is to proceed again.”

He declined to comment, however, when asked if the government might seek some way to settle the charges.

The case was being watched closely because it was the first in the chain of Wall Street securities fraud cases sparked by former stock speculator Ivan F. Boesky to go to trial. The others either had lead to guilty pleas or were pending. But just minutes before the GAF jury was dismissed, in a trial that had begun weeks after GAF’s, another jury in the same courthouse found Lisa Jones, a trading assistant in Drexel Burnham Lambert’s “junk bond” department in Beverly Hills, guilty of perjury and obstruction of justice.