Boesky Tells of Cash Payoffs for Information

Ivan F. Boesky calmly admitted today that he paid for inside information with briefcases full of cash as Wall Street’s most celebrated felon gave his first public testimony since his 1986 plea bargain.

Testifying against former friend John A. Mulheren Jr. on securities fraud charges, Boesky recounted the crimes he committed with other players in Wall Street’s insider trading scandal--such as Dennis Levine, formerly with Drexel Burnham Lambert Inc., and investment banker Martin Siegel.

“Did you understand you were committing a crime when you traded on inside information from Dennis Levine?” Assistant U.S. Atty. Scott Gilbert asked.

“Yes,” Boesky said in a firm and loud voice.

Boesky, center of the biggest insider trading crime scandal in Wall Street history, made his entrance through a back door of Manhattan federal court, where he faced Mulheren and a packed courtroom. It was Boesky’s first public appearance since he was released early from a three-year prison term last month.

Clean-shaven, with his white hair cropped short, Boesky wore a charcoal gray suit, white shirt and dark tie.

Boesky testified that he received inside information about proposed takeover attempts from Levine and Siegel, and that he had agreed to pay them up to 5% of his firm’s profits for their help.

He said he never gave Levine any money. Siegel, however, received a total of $800,000 in three cash deliveries, Boesky said.

“It was assembled by a colleague out of my personal accounts, put into a briefcase and handed by an intermediary to Mr. Siegel,” Boesky said.

A fourth cash delivery to Siegel was canceled when he received word about a Securities and Exchange Commission investigation into Levine’s dealings, he said.

Levine, the first to implicate Boesky, pleaded guilty to felony charges in June, 1986, and agreed to cooperate with prosecutors. Siegel also pleaded guilty to securities fraud-related counts and is awaiting sentencing.

Boesky is the government’s main witness against Mulheren on charges of stock manipulation and other securities fraud violations.

The two once were close friends but Mulheren became enraged when he learned Boesky had implicated him in wrongdoing a few years ago. At one point, Mulheren allegedly plotted to assassinate him with an assault rifle. Weapons charges against Mulheren were subsequently dropped.

Boesky, who avoided making eye contact with the defendant, said Mulheren was one of his few friends with whom he shared the information he received from Levine and Siegel.