Boesky to Be Witness at Trial for First Time : Securities: The convicted financier is scheduled to testify in next week’s trial of a former associate indicted for inside trading.

Ivan F. Boesky, the notorious former stock speculator whose aid to prosecutors toppled some of the mightiest figures on Wall Street, may soon debut as a prosecution witness in a criminal trial.

Boesky is slated to testify in the federal securities fraud trial of his former friend and business associate, John A. Mulheren Jr., who, like Boesky, was a stock arbitrager. Mulheren, 40, is accused of engaging in phony securities trades with Boesky and manipulating the stock market at his request. Jury selection is to begin Monday.

Since Boesky agreed to plead guilty to two felony counts in 1986, he has cooperated with federal investigators and testified behind closed doors in front of grand juries. The beans he spilled led to the cases against Drexel Burnham Lambert and its former junk bond chief, Michael Milken; against Boyd L. Jefferies, former head of the Los Angeles brokerage Jefferies & Co., and against Martin A. Siegel, a former takeover expert at Kidder, Peabody & Co. and at Drexel.

But because these cases led to guilty pleas rather than trials, Boesky hasn’t had to appear publicly as a government witness. In the Mulheren trial, his credibility will be on the line for the first time in front of a jury.

Thomas Puccio, Mulheren’s pugnacious defense lawyer, says he is looking forward to cross-examining Boesky, an admitted felon. “I think he’s a pathological liar,” Puccio said.

A telephone call to Boesky’s lawyer, Robert B. McCaw, for comment wasn’t returned Thursday. Prosecutors declined to discuss the impending trial, including how much of their case against Mulheren hinges on Boesky’s testimony.

The case has additional interest because Mulheren was arrested in 1988 after he allegedly attempted to drive away from his Rumson, N.J., mansion with a loaded Israeli-made assault rifle, planning, police said, to kill Boesky. Prosecutors said Mulheren was angry because Boesky was providing evidence against him.

However, Mulheren’s lawyers at the time said he was suffering a flare-up of his longstanding manic-depressive illness. New Jersey authorities dropped the gun case on the condition that Mulheren undergo treatment. Federal charges related to the alleged plan to shoot Boesky also were dropped.

Mulheren was indicted in June, 1989, in the case coming to trial Monday. He faces 41 counts of securities fraud, mail fraud, conspiracy and falsifying books and records.

Mulheren was a general partner and head of the now-defunct Jamie Securities, a firm that specialized in investing in takeover stocks, and he allegedly manipulated the price of Gulf & Western shares at Boesky’s request. He also allegedly engaged in sham securities trades that, the indictment charges, enabled Boesky to evade income taxes and circumvent the minimum capital requirements that the federal government imposes on securities firms.

In exchange, Mulheren allegedly got secret inside stock information from Boesky. If convicted, Mulheren faces a maximum sentence of five years in prison and a $250,000 fine on each count.

Leonard L. DeStefano, a former trader at Jamie, also is a defendant in the case. Like Mulheren, he has denied wrongdoing.

Mulheren currently is a partner in a New York Stock Exchange specialist firm, J&B; Specialist Corp. In association with a unit of Bear, Stearns & Co., J&B; makes a market for a variety of stocks, including those of Texaco and Prime Computer, on the floor of the exchange.

A spokeswoman for Bear Stearns said Mulheren doesn’t have a direct relationship with the firm and doesn’t receive money from it. A New York Stock Exchange spokeswoman declined to say if the exchange might discipline Mulheren if he is convicted.

Prosecutors are keeping mum about when Boesky will appear during the trial. Puccio says only that he has been informed officially that Boesky will testify.

Puccio declined to comment on the defense’s strategy in the trial. “In this business, one doesn’t telegraph any punches,” he said.

But Puccio said Mulheren “expects to be vindicated” in the trial and continues to maintain that “he hasn’t violated any laws.”

Mulheren is said to feel particularly betrayed by Boesky, in part because he arranged a bailout of Boesky’s company when it nearly went under in 1982 due to a bad investment. Mulheren and Boesky were close friends and had worked together in charitable activities.

Boesky recently completed a sentence that included time in a minimum-security federal prison.