Jury Finds Mulheren Guilty of Conspiracy, Market Manipulation : Wall Street: Jurors said they were deadlocked on the remaining 26 charges against Boesky’s former associate. The judge instructs them to continue deliberations.
Former stock speculator John A. Mulheren Jr. was convicted Tuesday on four federal felony counts of conspiracy and stock market manipulation after a trial in which admitted inside trader Ivan F. Boesky was a main prosecution witness.
The verdict was returned by a jury that has been deliberating since June 29. The jury acquitted Mulheren’s co-defendant, Leonard L. DeStefano, a former trader at Mulheren’s firm, on the two charges pending against him. But the jurors, eight women and four men, said they were deadlocked on 26 other charges still pending against Mulheren.
U.S. District Judge Miriam Goldman Cedarbaum rejected a request by Mulheren’s lawyer, Thomas Puccio, to declare a mistrial on the remaining charges. Instead, she ordered the jury to continue deliberating.
Mulheren, 41, the gregarious former head of Jamie Securities Co., appeared unfazed by the verdict. Shortly after it was returned, he laughed and chatted with lawyers, relatives and friends in the courtroom.
Jamie, now defunct, in the mid-1980s specialized in speculating in the stock and options of takeover targets. Mulheren originally was named in a 42-count indictment that accused him of performing a variety of illegal favors for Boesky, including secretly holding stock for him, manipulating the stock market at his request and drawing up fraudulent invoices. The judge, however, dismissed 12 of the counts before the jury began deliberating.
Puccio and one of the lead prosecutors in the case, E. Scott Gilbert, both declined to comment immediately on the verdict. Thomas Fitzpatrick, DeStefano’s defense lawyer, said he was “enormously relieved” that his client was acquitted. He asserted that the entire case had been based on “speculation and surmise.” Fitzpatrick said: “I feel very badly that John Mulheren was convicted.”
Mulheren faces a maximum sentence of five years in prison and a $250,000 fine on each of the four counts.
The tall, beefy Mulheren never wore a suit and tie during the trial, choosing instead to stay with his usual informal dress of a baseball jacket, open-collared sport shirt, slacks and boat shoes with no socks. Mulheren had had a meteoric rise on Wall Street, heading his own department at Merrill Lynch at the age of 26 before eventually founding his own firm.
Mulheren is an acknowledged manic-depressive who was once arrested on charges of leaving his New Jersey mansion with a loaded assault rifle, allegedly planning to shoot Boesky. But those charges later were dropped.
Mulheren’s market manipulation and securities fraud trial lasted more than six weeks and featured Boesky’s public debut as a government witness. Under questioning by prosecutors, he provided ample details about Mulheren’s wrongdoing. But under cross-examination by Puccio, Boesky became combative and his memory seemed to fail. He admitted that several times he had lied under oath. He claimed that he didn’t know the state of his personal finances and said he couldn’t remember details of his many instances of insider trading.
Puccio’s battle to win an acquittal for Mulheren rested largely on efforts to discredit Boesky, who served a three-year prison sentence. Puccio argued that while Boesky’s intentions may have been illegal, Mulheren never intentionally broke the law when performing favors for him.
But other prosecution witnesses corroborated Boesky’s story. They included Michael Davidoff, Boesky’s former head trader, and Edward McCarthy, a former general partner and chief financial officer of Mulheren’s own firm. When Mulheren took the witness stand in his own defense, he too seemed combative. Under cross-examination by prosecutors, he claimed not to remember many basic details of his firm’s operations and its relations with Boesky.
The four charges on which Mulheren was convicted included a general conspiracy charge, which accused him of conspiring with Boesky to manipulate the stock market, helping Boesky evade taxes and “exchanging nonpublic information of great value.” The other three charges related to the manipulation of Gulf & Western stock in October, 1985.
The jury remained deadlocked on charges that Mulheren had illegally “parked” stock for Boesky, including shares of Unocal, Warner Communications, Boise Cascade and R. H. Macy & Co. Mulheren currently is a partner in a New York Stock Exchange specialist firm, which makes a market for individual stocks on the floor of the exchange. A NYSE spokesman said it wasn’t clear whether Mulheren’s conviction could expose him or the firm to disciplinary action by the exchange, since Mulheren himself isn’t a member of the exchange. The firm is J&B; Specialist Corp.
Judge Cedarbaum wasn’t expected to set a date for sentencing until the jury finished deliberating on the other charges.
