Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 13, 1990 TAG: 9005130268
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: DWAYNE YANCEY STAFF WRITER
DATELINE: LENGTH: Medium
Business Week magazine hypes the trial, expected to run four to six weeks, as "the main event" in the Wall Street scandal now that junk-bond king Michael Milken has pleaded guilty.
Mulheren, a 1971 Roanoke College graduate who has showered his alma mater with more than $2.5 million in donations and later served on its board of trustees, is charged with 41 counts of conspiracy and securities fraud for allegedly helping Boesky manipulate stock prices.
He faces up to 210 years in prison and $10.5 million in fines.
Mulheren, who lives in New Jersey, was a well-known prankster during his days at Roanoke College - once erecting a 10-foot-high concrete monument on campus that authorities couldn't remove because he had anchored it to underground utility pipes.
He became one of Wall Street's top stock speculators.
Mulheren idolized Ivan Boesky, learning from him the complex world of risk arbitrage, in which a trader buys stock in a company that's a target of a takeover attempt in hopes of profiting from the expected rise in its stock prize and the drop in the price of the buyer's share.
But if the takeover plans fall through, the traders face the risk of being left with enormous losses.
In the early '80s, Mulheren and Boesky became friends and business partners.
When Boesky suffered a major financial loss in 1982, Mulheren bailed him out.
As a sign of their friendship, Boesky made Mulheren a trustee for his children. Boesky also donated to the John A. Mulheren Jr. Scholarship Fund at Roanoke College.
But the New York grand jury that indicted Mulheren in 1988 charges the two also broke the law by illegally manipulating stock prices as a way to help Boesky evade taxes. In return, Boesky supplied Mulheren with insider information about corporate takeovers, the indictment alleges.
When Boesky reached a plea bargain agreement with federal prosecutors, he implicated a number of former colleagues in the biggest insider trading case ever - including Mulheren, Milken and the firm of Drexel Burnham Lambert Inc.
In February 1988, Mulheren was arrested pulling out of the driveway of his mansion - with a gym bag full of army fatigues and a loaded Israeli assault rifle in the back seat of his Mercedes Benz. Police said Mulheren was going to shoot Boesky and his top trader for turning him in; Mulheren's attornys blamed the incident on a stomach ailment that had forced him to stop taking lithium, a drug he had been taking to control manic depression.
Prosecutors later dropped the weapons charges and Mulheren agreed to perform 100 hours of community service and enter a three-year pretrial probationary program.
Boesky will be the government's star witness against Mulheren. This will be the first time Boesky has testified since he pleaded guilty to one felony - paying $100 million in penalties and serving two years of a three-year prison term - and Mulheren's attorneys are expected to grill Boesky about his stock dealings in an attempt to discredit him.
"We believe that Boesky lied to the government about the extent of his involvement in crime and the extent of his assets," Mulheren's attorney, Thomas Puccio, said last week. "It gets back to the question of whether or not Boesky has a bias in favor of the government and whether he is a trustworthy witness."
Mulheren is expected to produce his own celebrity as a character witness - Springsteen, a friend and former neighbor in New Jersey.
The Associated Press also contributed to this story.
by CNB