Boyd L. Jefferies can't stand the possibility of having time on his hands.
The founder and former chairman of the Los Angeles-based brokerage Jefferies & Co. used to plant himself at the firm's trading desk at 2:30 a.m. and work straight through until 6 p.m. Now, banned from the firm and the securities industry, and living part of the year in this relaxed resort community high in the Rockies, Jefferies still compulsively gets out of bed at 2 a.m.
He tries to create for himself a schedule as rigorous and demanding as when he was one of the nation's most powerful traders of big blocks of stock and a pivotal figure in corporate raids. But in Aspen this hasn't been easy.
Jefferies, 58, was sentenced July 6 to five years of probation and fined $250,000 for the two securities fraud counts to which he pleaded guilty in 1987. He says he expected, and prepared himself emotionally, to go to jail. But the judge, recognizing his extensive cooperation with prosecutors and concluding that Jefferies is "essentially a good man," let him remain free. He still hopes, he says, to return eventually to the company--something the government may allow him to do when five years have elapsed from his guilty plea.
In the meantime, the feverish energy and organizational skill of the man who built a nationally prominent brokerage firm are being concentrated instead on the Aspen Junior Golf program. He has thrown himself into the free golf program for youngsters with a zeal that has astonished the local residents. Arriving in predawn hours to hand-water a new putting green or mow the junior driving range that he built himself, Jefferies has increased the number of children participating in the program by more than 400%, arranged to bus in kids free from a less prosperous community down the valley and organized national tournaments.
He devotes himself as well to a scholarship program for the children of Jefferies & Co. employees and is founding an athletics program for children in La Quinta, a low-income, predominantly Mexican-American community near Palm Springs. He has several personal business interests and continues to commute to New York to meet with prosecutors and testify in securities fraud trials. But this isn't enough to fill up his days.
Seizing the occasion of a reporter's visit, he hastily plans a dinner party at a restaurant--for 59 guests. At 5:30 a.m., hours before he is to meet the reporter for breakfast, Jefferies can't resist picking up the telephone and awakening a few invitees who hadn't yet responded.
Used to Early Calls
"I don't like to leave things hanging," he explains later.
The recipients of those phone calls were comparatively lucky. James P. Linn, Jefferies' attorney in Oklahoma City, says he has almost gotten used to the daily call from his client at 4:15 a.m.
Jefferies, despite his restlessness, seems in good spirits these days. He and his wife, Sharon, say they are surprised and enormously relieved that he isn't on his way to jail. In frank interviews over two days, Jefferies alternates between being contrite about his illegal actions and wishing that he had fought the charges instead of pleading guilty. He has a few words of criticism for the current top executives of Jefferies & Co., who were picked by him. And, even though he got probation, he bridles at suggestions that he got off easy.
"Let anyone who says that trade places with me for the last three years," he says.
Jefferies' world unraveled on Nov. 19, 1986, the day he received a subpoena from the Securities and Exchange Commission. The federal government had begun prosecuting former stock speculator Ivan F. Boesky, suspected of making at least $50 million from insider trading. Boesky, in turn, had implicated Jefferies. Jefferies had agreed to "park" stock for Boesky, holding it for him without disclosing its true ownership, then returning it to him without profit or loss.
After agreeing to plead guilty to two counts and cooperate with the government's continuing investigation of illegal practices on Wall Street, Jefferies agreed to sever his ties to the firm and be banned from the industry.
A Rough Period
This, his wife says, precipitated a depression from which he is only now recovering. "He really had lost any semblance of self-esteem," she says.
He has been cut off by friends and suffered the stigma of testifying against former friends and clients. He has been raked over the coals by defense lawyers during repeated cross-examinations. Even more painful, though, has been the forced separation from what for 25 years had been the consuming passion of his life: the trading desk at Jefferies & Co.
His reputation for reliability--and, especially, confidentiality--and his knack for finding willing buyers or sellers on short notice earned him the confidence of the major players when the corporate takeover game flourished in the early 1980s. Jefferies pulled off feats of trading machismo that still are remembered with awe on Wall Street.
Sharon, who used to get up with him at 1:30 a.m. to make him breakfast and pack a lunch, says he was so committed to pleasing clients that he brought different ones home with him for dinner almost every night. When they got married 17 years ago (she is his second wife), a client and his fiancee accompanied them on their honeymoon trip to Monte Carlo. But Jefferies' dedication to making clients happy also proved his downfall.
When they began asking him to bend the rules, he did.
Jefferies has admitted that illegally hiding the ownership of blocks of stock for clients, including Boesky and former Singer Co. Chairman Paul A. Bilzerian, and also manipulating the price of certain stocks when asked to do so by clients.
Now, cut off from his Jefferies & Co. headquarters on the 33rd floor of the Union Bank building in downtown Los Angeles, Jefferies conducts his limited personal business in a small suite of offices above a bicycle rental shop in Aspen. He is dressed in the relaxed attire appropriate to a resort town--a T-shirt, Windbreaker, jeans and sneakers. But his restlessness is betrayed by his incessant smoking of Benson & Hedges cigarettes, several packs a day, and by his frequent jotting down of notes of things to do on yellow legal pads, which he is seldom without.
He lauds the opportunity that he now has to spend much of the day outdoors. He says he feels healthier and more well-rounded than when he was working. But he confides that he never missed the outdoors during the more than two decades when he spent 15 hours a day at the trading desk. "Working in the brokerage business was so darned exciting for me and such a turn-on that God, no, I didn't miss being outside."
Jefferies states bluntly that being cut off from his life's blood at times makes him regret his decision to plead guilty. "If I had it to do over, I would have fought the thing," he says. But he quickly adds that "it really would have been messy for the company. . . . I just think it would have destroyed the company if I didn't take the rap."
Jefferies says his current lawyer, Linn, has persuaded him that he could have beaten the charges if he had gone to trial. Jefferies insists, however, that he is ashamed of what he did. He believes his crimes were relatively minor ones but admits that "we were doing a lot of wrong things." He said they easily could have led to something even more serious if he hadn't been caught.
"Once you break the rules, the next time somebody asks you to break the rules it is much easier," he says.
Expected Slap on the Wrist
Jefferies adds that he was aware that some of his employees also were accommodating clients by violating the securities laws. "We all might have put the company out of business and ruined the lives of 400 people (who worked there) and their families."
Jefferies says he knew at the time that he was breaking the law. But given how such violations had been handled in the past by the SEC and the Justice Department, he believed that the worst he would get if caught was a slap on the wrist. The U.S. Attorney in Manhattan confirmed in court that when the charges were filed against Jefferies, no one in the country had ever been prosecuted criminally for "parking" stocks.
Jefferies is rankled when people compare what he did to what Boesky did. He is especially irritated whenever a newspaper or TV news report states--erroneously--that he was accused of insider trading. Referring to Boesky, who had carried suitcases filled with cash to pay off investment bankers for tips on pending corporate takeovers, Jefferies says: "I think what Ivan did was despicable."
While some of this might sound self-serving, U.S. District Judge Morris E. Lasker, who sentenced Jefferies, agreed that there was an essential difference between his crimes and Boesky's. In passing sentence, Lasker noted that Jefferies was never accused of insider trading and that his transgressions, mainly committed to keep or win clients, didn't result in any significant personal profit. It was Judge Lasker who in 1987 sentenced Boesky to three years in prison.
Jefferies is used to flinging himself into whatever task is at hand, and he didn't shrink when it came to cooperating with federal investigators. Appearing in person at the sentencing hearing to speak on Jefferies' behalf, Benito Romano, the acting U.S. Attorney in Manhattan, said his office wouldn't have uncovered some of the violations now being prosecuted if Jefferies hadn't gone out of his way to point them out.
Turned Things Around
Jefferies says that if he had chosen to do so, he could have fulfilled his agreement with prosecutors without volunteering some of the information that he did. "There are ways of cooperating and yet not cooperating," Jefferies says. But he says he grew impatient when several young, inexperienced SEC lawyers sat across from him with stacks of seized documents during his initial interrogations and betrayed from their questions that they didn't realize what they had.
"I said to them, 'Let's do the reverse--you give me the documents and in 15 minutes I'll tell you what they mean and what to look for,' " Jefferies says.
His information led to criminal indictments of GAF Corp. and its vice chairman, as well as Bilzerian and Wall Street stock speculator and merger specialist Salim B. Lewis.
Nevertheless, the reality of what he was doing--turning informant on the very people he had for years devoted himself to serving--appeared to sink in when he was called for the first time as a prosecution witness. That was in January in the trial of GAF Corp. and its vice chairman, James T. Sherwin. They were accused of hiring Jefferies & Co. to manipulate the market price of Union Carbide stock in 1986.
Jefferies seemed acutely uncomfortable as he took the witness stand, and on the first day his normally ruddy complexion was tinged with green. The American Lawyer magazine began a piece on the case with the line "Boyd Jefferies looked as if he were about to throw up."
Arthur L. Liman, GAF's defense lawyer, noted for his withering cross-examination of Oliver North during the televised Iran-Contra hearings, called Jefferies a con man in court and told jurors: "He was the supersalesman of Wall Street. He could sell snow to Eskimos."
The GAF trial twice ended in mistrials and will be tried again in November. But his testimony led to the June 9 conviction of corporate raider Bilzerian on all nine counts against him.
Still Very Wealthy
How does he reconcile himself to testifying against former friends and clients? "I look at it that these guys brought it on themselves. They asked me to do these things. They knew they were breaking the law when they asked me to do these things. I got caught. I feel sorry for them. All these guys were my friends. But they brought it on themselves."
Despite the personal reversals he's suffered, there are some, including Liman and other defense lawyers, who have argued that he has it relatively easy. And in fact, at least outwardly, his circumstances aren't uncomfortable. He confirms that his personal net worth is somewhat over $30 million. He and Sharon plan to sell their condominium overlooking the Roaring Fork River in Aspen and build a house on a piece of property they bought on Red Mountain. The land, less than an acre purchased for over $1 million, has a panoramic view of Aspen and Aspen Mountain. They also spend about six months of the year at a condominium they own on the grounds of the Vintage Country Club in Indian Wells, Calif.
He dabbles in investing in real estate and start-up businesses, including a small firm that manufactures the "Debtman"--a novelty item for executive desks that calculates the national debt every second. He no longer, however, trades stocks for his own account.
Jefferies says that for a couple of years after he left the firm he traded stock for his own account, but gave it up because he found it too frustrating not to be able to spend all his time trading. His investments are now handled by two money managers. Ernie Fyrwald, the head golf pro in Aspen and a close fbiend, says "a lot of people have said to me that he got a light sentence." But Fyrwald, noting Jefferies' forced abandonment of the securities industry, disagrees. "I compare it to saying to Arnold Palmer--'OK, buddy, you can't play golf for five years,' " Fyrwald says.
To be sure, the idea of Jefferies atoning for his wrongdoing by spending time out on the golf course has generated more than a few barbed comments. But Jefferies these days hardly ever plays golf. He says he has played only twice this summer. Instead, he seems to revel in physical labor.
Picks Up Trash
On a typical day, he waters and mows the new parts of the course designated for the junior golf program, and runs the weed trimmer. He hoists bags of grass seed and fertilizer, and sometimes retrieves golf balls from the junior driving range. He returns in the evenings to make sure sprinklers are properly set. In between, he meets with the staff of the program, arranges contributions of golf clubs and equipment, orders a new shipment of Aspen Junior Golf T-shirts, sends out invitations to junior golf tournaments and never, ever appears to be relaxing.
Werner W. Anderson, a high school teacher who drives the school bus that brings kids up from the less prosperous neighboring town of Basalt, said he has often sat in his bus and watched Jefferies roam the parking lot picking up trash.
Jefferies goes about it with the air of a man endeavoring to expiate past sins. But if he is attempting to do good, why choose golf? Aspen already had well-established softball and soccer programs, he says. The golf program, on the other hand, was languishing, with only 40 participants. It now has about 250. He asserts that by teaching the youngsters manners and responsibility on the course, "We are doing a darn good job of making potential citizens out of them."
Although he solicits contributions, he has financed much of the program himself, spending close to $300,000 since 1987. Jefferies reacts angrily when people suggest that the program mainly benefits the rich children of Aspen. "Sure, last year (actor) Don Johnson's kid was in the program," he says. "But that's one out of 200."
Stung by Report
In any event, his activities were enough to satisfy Judge Lasker, who pointedly refrained from sentencing him to perform any community service. Referring to the Aspen program, the scholarship program and the athletics program that he is organizing in La Quinta, Judge Lasker said: "You have been extraordinarily active in charitable enterprises" already.
Jefferies' dream is to return to his trading desk at Jefferies & Co. How realistic this dream is remains to be seen. He says he felt stung in March when Business Week magazine ran a piece on how well the firm has been performing while he's gone and quoted Executive Vice President Alan D. Browning saying that "we're better off without him."
Browning couldn't be reached for comment, but his secretary at the firm says he denies having said that about Jefferies. Frank Baxter, Jefferies & Co.'s current chief executive, says he doesn't think the company would be better off without him. But pressed to elaborate, he says: "The earliest that can happen is in three years, and I'm just trying to get through today."
Under his settlement agreement with the SEC, Jefferies is forbidden to have any business dealings with Jefferies & Co. He has had to put the stock he owns in the company--somewhere between 10% and 12% of its shares outstanding--in a voting trust administered by a friend, James M. Jackson.
Jefferies discloses that he regrets having taken the company public in 1983. Had the firm remained private, he says, he could have been more generous in rewarding his staff, as Drexel Burnham Lambert's former junk bond chief Michael Milken had been with his staff.
Now, Jefferies says, he wouldn't mind seeing the firm bought out by a Japanese investment bank. He says Japanese firms haven't been very successful in penetrating the U.S. institutional market. "I think the company would be a natural for a Japanese investment banking firm," he says. "The two of us together could dominate the world in securities trading."
Jefferies says, however, that he knows of no discussions under way with any possible buyers. Asked about the idea of being acquired by a Japanese firm, Baxter demurs. "I think it's a good investment for anyone," he says.
Mother a Perfectionist
When he reflects on his childhood and why he is so driven, Jefferies notes that he came from a relatively poor family in Redlands, Calif., and that, when he was little, his family didn't even have enough money to buy him a baseball mitt. He says he began performing odd jobs at an early age to earn money. "I grew up in a family that didn't have very much," he says. "I knew that if I wanted the better things in life--not that I knew what they were--I'd have to work my ass off for them."
He also says his mother, a high school cafeteria worker, had a very strong personality and imbued him with her perfectionism. "I would mow the lawn and she would come out and look at it and point out all the places where I didn't do it just right, and she would say damn it, you're going to do it again until you get it right," he says.
Jefferies' daughter, Carol, 32, who lives in New Mexico, says that despite the hardship her father has been through in the past few years, she believes that what happened was for the best. She says they hadn't spoken for over four years--in part, she says, because he was difficult to get close to and had strong opinions about how she should lead her life.
She said the prospect of Jefferies' sentencing led to a reconciliation a couple of months ago. "He used to be icy," she says. Recently, he seems warmer and more accepting, and they have established a close friendship. "He's a human being now," she says.
Jefferies' son, Stephen, was killed in a motorcycle accident in 1981, when he was 28. The scholarship program Jefferies administers was established in his memory.
Jefferies today continues to search for outlets for his restless energy. Fyrwald, the golf pro, some months ago visited Boyd and Sharon at their Indian Wells home and stayed overnight. He recalls being startled from sleep at 3 a.m. by a noise outside. He jumped out of bed and looked out the window, thinking that there might be an intruder. "But it was just Boyd out watering the lawn," he says.
For her part, Sharon says "Being married to Boyd is a full-time job. It's like having 12 kids around."
She says that because he wants it so much, she hopes his dream of returning to Jefferies & Co. will come true. But she says she was afraid Boyd was going to kill himself from the long hours he used to put in at work, and she says she likes their life much better now.
"I would like to see him just go back (to Jefferies & Co.) and not get fully entrenched," she says. But is there really any chance that he will mellow a bit in the next three years? "I think he will," she says. "I'm going to put Valium in his breakfast cereal."