Boesky Secretly Taped Milken Talks : Discussions Held Before Speculator Was Named as Informant

Stock speculator Ivan F. Boesky secretly tape-recorded three conversations with indicted junk bond financier Michael Milken in 1986 shortly before Boesky was publicly named as a government informant, court documents reveal.

The nature of the discussions was not disclosed, and prosecutors and defense lawyers on Thursday declined to discuss their content. But the tapes could emerge as critical evidence in Milken’s scheduled March, 1990, trial on fraud and racketeering charges.

The tape recordings, made on Oct. 1, Oct. 9 and Nov. 6, 1986, were mentioned in a letter from the government to lawyers representing Milken. The letter was attached to a recent filing in U.S. District Court in Manhattan.

The final recorded conversation occurred just eight days before the revelation that Boesky made a deal to cooperate with prosecutors in their probe of Wall Street corruption.

Milken, the former head of junk bond operations for Drexel Burnham Lambert Inc., was indicted in March on 98 counts of fraud and racketeering for an alleged series of schemes with Boesky.

Implicated by Levine

Boesky in November, 1986, agreed to plead guilty to one criminal count of filing false information with the government and is serving a three-year jail term.

His stock dealings with Milken formed the basis of much of Milken’s indictment, principally a $5.3-million payment from Boesky to Drexel to settle the balance in what the government calls a secret arrangement involving insider trading, tax fraud, rigged corporate takeovers and other violations.

It was known that Boesky secretly tape-recorded conversations after he was recruited as an informant but the identities of those he tape-recorded had not been previously disclosed. Boesky was first implicated in the spring of 1986 by investment banker Dennis B. Levine and he agreed to cooperate with prosecutors sometime that summer.

If the tapes contain damaging details about Milken, they could aid the government’s case. But if Milken said nothing incriminating despite attempts by Boesky to trap him, it could help the defense.