Mulheren Draws 1-Year Jail Term, $1.6-Million Fine
Former stock speculator John A. Mulheren Jr., convicted of manipulating the stock market on behalf of admitted inside trader Ivan F. Boesky, was sentenced Wednesday to a year and a day in prison and fined $1.6 million.
U.S. District Judge Miriam Goldman Cedarbaum said she believed that a prison sentence was required “because it is so important that investors and traders and all other members of the public be aware that anyone who tampers with the integrity of the stock market will go to prison.”
Mulheren, 41, former head of the now-defunct Jamie Securities, was convicted in July on four felony counts related to the manipulation of Gulf & Western stock on Oct. 17, 1985. Mulheren was said to have bid up the price of the stock by buying 75,000 shares, a move that allegedly helped Boesky sell back a much larger block of shares to Gulf & Western’s management at a favorable price. Gulf & Western is now known as Paramount Communications.
Boesky testified against his former friend and business associate during the trial.
Thomas Puccio, Mulheren’s lawyer, said his client may actually serve less than two months in prison. The judge gave Mulheren credit for about two months already served in jail in 1988, after he was arrested on charges of leaving his home with a loaded assault rifle, allegedly intending to shoot Boesky.
Federal prisoners sentenced to a year and a day normally are eligible for parole after four months. Puccio said the time already served may be deducted from the four months.
Cedarbaum said the amount of the fine was based on a calculation of how much people who bought Gulf & Western stock lost by paying the artificially higher stock price during the 12-minute period when the price was manipulated. Mulheren is also required to pay a $50 “special assessment” on each of the four counts.
Puccio said he will appeal the conviction. The judge allowed the former stock arbitrager to remain free on bail pending the appeal.
The tall, beefy Mulheren, who acknowledges suffering from manic-depressive psychosis, continued to maintain his innocence and appeared to take the sentence in stride.
Asked later what he thought of the sentence, Mulheren grinned and said: “Nobody likes to go to jail, right?” He added: “I think I’m innocent.”
Mulheren sat through much of the sentencing with his eyes closed and did not stand up when the judge announced the sentence. At times, his head resting on one hand, he appeared to doze. But he perked up afterwards, slapping friends and relatives on the back and joking with them. As always, he shunned a suit, wearing his customarily informal attire that on Wednesday consisted of an open-collared pink shirt, a suede Windbreaker and olive trousers.
The jury that convicted him wasn’t able to reach a verdict on 26 other securities-related charges. Prosecutors haven’t decided yet if they will attempt to retry him on those charges.
Assistant U.S. Atty. E. Scott Gilbert had argued that Mulheren’s mental illness shouldn’t mitigate his sentence, since doctors had testified that the illness wasn’t responsible for his illegal activities.
The sentencing was accompanied by the loud background noise of a respirator, attached to Steven McDonald, a former New York City police officer who was shot in the line of duty and paralyzed. Mulheren has helped McDonald’s family and McDonald had asked the judge to be lenient.
