Beverly Hills Trader Gets 18 Mos. in Jail : Drexel Burnham Aide Lied in 3-Yr. Inside-Trade Probe

A federal judge today sentenced former Drexel Burnham Lambert Inc. assistant trader Lisa Jones to 18 months in prison and a $50,000 fine for lying during the government’s investigation of Wall Street fraud.

Jones, 26, who worked in Beverly Hills, was the first person convicted in the nearly three-year federal insider trading probe and her case had indirect links to the prosecution of former Drexel financier Michael R. Milken.

Jones was found guilty in March on five counts of perjury and two counts of obstruction of justice for lying to a federal grand jury in January, 1988, in an investigation of trading involving Drexel.

U.S. District Judge Leonard B. Sand imposed the minimum sentence recommended under new federal guidelines, but he said “there was a very conscious and deliberate decision which she made to lie.”

“No one contends she did not know she was lying,” he said.

Jones was a teen-age runaway who climbed to a $100,000-a-year job as an assistant bond trader in Drexel’s high-yield junk bond department in Beverly Hills.

Jones told the federal grand jury she did not recall any discussions about stock “parking” in her contacts with Princeton-Newport Partners LP, a defunct investment firm whose principals recently were convicted of securities fraud.

Indirect Link to Milken

But prosecutors showed she handled transactions for former Drexel trader Bruce Lee Newberg, who was convicted in the Princeton-Newport case and faces other charges. The government said the transactions constituted parking, which involves concealing the true ownership of stock.

Newberg reported directly to Milken, who has been indicted on 98 counts of racketeering and securities fraud.

Jones’ attorney, Daniel Bookin, argued that Jones was mentally unstable at the time she was questioned during the Drexel investigation and that any jail term would be harmful to her. He cited a psychiatrist’s report to bolster his defense.

But Assistant U.S. Atty. Mark Hansen, in urging a sentence above the possible minimum, said Jones’ actions severely impeded the government’s Princeton-Newport investigation.

The judge ordered Jones to serve 18 months in a minimum security women’s prison in Phoenix, where he said she would have access to mental health therapy.

He also ordered 2 1/2 years of supervised work release with continued mental health treatment. Jones was fined $25,000 plus the cost of her incarceration and supervised release, for a total of about $50,000.