Former Boesky Ally Found Guilty of 4 Trade Fraud Counts

From Reuters

Former high-flying stock speculator John Mulheren Jr. was found guilty today on four counts of securities fraud for helping Ivan Boesky break a long list of securities laws in exchange for inside information.

But the jury remained deadlocked on 26 other charges. U.S. District Judge Miriam Cedarbaum accepted the partial verdict from the jury and sent them back to continue deliberations on the other charges.

The maximum sentence is five years in prison and a $250,000 fine on each of the counts.

Mulheren, 40, formerly a chief trader at now-defunct investment firm Jamie Securities, had been charged with 30 counts of conspiracy, securities and mail fraud and keeping false records.

Although the government objected to the partial verdict, the judge said she would accept it.

"My experience is that it is wise to take from the jury the verdicts they have reached and to allow them to continue on those they have not reached," she said.

After accepting the partial verdict, she told the jury that she did not believe that it had spent an inordinate amount of time deliberating the charges.

The jury began deliberating June 29 after a seven-week trial.

The charges stem from several schemes in which Mulheren allegedly helped Boesky cheat on his income tax, manipulate stock prices and avoid rules dictating how much money trading firms must have on hand to cover losses.

The trial was closely watched because Boesky, who was at the heart of the government's long-running probe of insider trading on Wall Street, took the stand for the first time as a key prosecution witness.

Boesky, once one of Wall Street's most powerful speculators, was sentenced to prison for three years and paid $100 million in fines and repayment of ill-gotten funds. Boesky was released from a Brooklyn halfway house in April.

Although Boesky and Mulheren had been close friends at one time, their relationship soured after Boesky began cooperating with prosecutors.

Mulheren, a manic depressive who takes lithium to control his condition, threatened to kill Boesky in 1988. When police arrested Mulheren in front of his New Jersey home, they found several firearms in his car.

Mulheren's defense attorney attempted to discredit Boesky during cross-examination and final arguments. At the close of the trial, Mulheren's attorney called Boesky a liar and a "pile of human garbage."

Mulheren, who always dressed casually at the trial, had taken the stand on his own behalf. He usually wore sports shirts, no tie or jacket and frequently no socks.

Among the charges were that Mulheren manipulated the price of Gulf and Western, now Paramount Communications Inc., to help Boesky make a greater profit when he sold a large stake in the company.

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