Boesky Spars With Mulheren’s Lawyer During Testimony


The contemptuous side of Ivan F. Boesky emerged Wednesday as he parried hostile questions from a defense lawyer for the first time.

Boesky, 53, had testified calmly for a day and a half as the main prosecution witness in the criminal securities fraud trial of his former friend, John A. Mulheren Jr. But as defense lawyer Thomas Puccio began cross-examination, attempting to demolish the credibility of the admitted inside trader, Boesky seemed uncooperative and missed few chances to make a dig at the lawyer.

Puccio elicited from Boesky an admission that he had lied under oath many times and that he couldn’t remember the number of times he had broken his oath. Boesky confirmed that he had often traded illegally on inside information, and that he had “many, many, many” times lied on official reports filed with the New York Stock Exchange. But when pressed for details about past acts of perjury and other misdeeds, Boesky’s memory seemed to fail.

Dozens of times he told Puccio: “I would have to be refreshed.” He said that, without looking at documents, he had no idea how much money he had made from individual instances of insider trading.


Boesky, who pleaded guilty to a single felony count in 1987, also said he couldn’t say with any precision what he and his wife were worth in 1986 when the government prepared to file charges against him. It was “somewhere between $100 million and $1 billion,” he said.

Boesky acknowledged lying to the Securities and Exchange Commission about his transactions in the securities of SCM Corp. in 1985. When Puccio inquired what the lie was, Boesky said: “I thought you’d never ask. I lied about not talking to your client, sir.”

Puccio asked Boesky about a magazine article from the 1980s that quoted Boesky comparing his accumulation of money to climbing a ladder of silver, and said money to him was an “aphrodisiac.” The article appeared in the Atlantic magazine, but Puccio mistakenly said Harper’s. When Boesky corrected him, Puccio said “I had the wrong magazine.”

Boesky sternly replied, “I had the right magazine.”

But Boesky said he didn’t remember making the comments attributed to him in the article. “That’s not how I view money, sir, not then, not now,” he said.

Puccio’s rapid-fire questioning of Boesky seemed calculated to elicit a hostile or arrogant response, to make Boesky seem an unsympathetic figure to the jury. Several lawyers present as observers in the courtroom said he appeared to be succeeding. Puccio is a former prosecutor who won convictions of several congressmen in the Abscam bribery case and who, as a defense lawyer, won an acquittal of attempted murder for Claus Von Bulow, an East Coast socialite accused of poisoning his wife. But it wasn’t clear how much of an impact Puccio’s examination of Boesky will have on the Mulheren case.

Prosecutors are expected to call other witnesses, including at least one of Mulheren’s own former employees, to support the charges in a 41-count indictment. It accuses Mulheren of participating in a scheme with Boesky in which the two men did illegal favors for each other. Specifically, Mulheren is accused of conspiracy, securities and mail fraud, and falsifying books and records. Mulheren was the head of the now-defunct Jamie Securities, which, like Boesky’s former company, speculated in takeover stocks.

Although Boesky’s cooperation with prosecutors led to several major securities fraud cases, including those against Drexel Burnham Lambert and its junk bond chief, Michael Milken, the Mulheren trial marks his first public appearance as a prosecution witness.


On Tuesday, under questioning by Assistant U.S. Atty. E. Scott Gilbert, Boesky testified about illegally arranging a sham sale of Unocal stock to Mulheren’s firm so that Boesky could claim a false tax loss. He also acknowledged passing on insider tips about stocks to Mulheren, although Mulheren isn’t specifically accused of insider trading.

On Wednesday, as Gilbert finished his direct examination of Boesky, the former stock speculator said he had indicated to Mulheren that he would like him to manipulate the price of Gulf & Western stock in 1985, a move that allegedly helped Boesky sell a big block of Gulf & Western stock back to the company at a favorable price. But Boesky said he didn’t specifically ask Mulheren to manipulate the stock price, but simply let it be known that he wouldn’t be unhappy if the stock climbed by 25 cents per share to $45. Boesky said Mulheren replied simply, “I understand.”

The indictment accuses Mulheren of manipulating the stock price.

Boesky also testified about false invoices issued by his firm to hide transfers of money from Mulheren’s company to the Boesky firm. The money allegedly was for profits earned on securities held temporarily by Jamie Securities under the sham securities trades. Boesky said the payments were disguised on invoices as bills for “floor brokerage” services carried out by Boesky’s firm for Mulheren.


During the cross-examination, Puccio held up a book written by Boesky, “Merger Mania,” published shortly before Boesky’s downfall. In it, Boesky purports to explain his techniques for succeeding as a stock arbitrager. Boesky never mentioned in the book, however, that much of his success was based on leaks of inside information about pending takeover deals.

Boesky writes, for example, about his success in speculating in Getty Oil stock in the early 1980s but left out the fact that he had inside information about pending bids for the company. “This was a significant omission,” Boesky acknowledged Wednesday.

But asked how much money he had made illegally on the Getty stock, Boesky resorted to his favorite answer: “I would have to be refreshed.”