Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, May 18, 1990 TAG: 9005180529
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: NEW YORK LENGTH: Medium
Mulheren, 40, formerly head of the now-defunct Jamie Securities Co., is accused in a 41-count federal indictment of using information leaked by Boesky to engage in illegal insider trading. The indictment also charges that he performed illegal favors for Boesky, including "parking" securities to help Boesky evade income taxes and manipulating the price of Gulf & Western stock.
A 1971 graduate of Roanoke College, Mulheren has donated more than $2.5 million to the college and has served on its board of trustees.
Assistant U.S. Attorney E. Scott Gilbert, the lead prosecutor in the case, charged that Mulheren's relations with Boesky were a "two-way street," with each willing to do illegal favors for the other. Boesky, believed to have engaged in widespread insider trading, pleaded guilty in 1987 to a single felony count. He was sentenced to three years in prison, paid $100 million in penalties and has since cooperated with prosecutors in many major securities fraud cases.
Boesky is expected to testify against Mulheren, perhaps as early as Monday. Defense lawyers said that the credibility of Boesky, probably the most notorious inside trader ever, will be a major issue. Boesky's testimony will mark his debut as a trial witness for the government.
Gilbert said that both Boesky and Mulheren in the early 1980s were in the business of "risk arbitrage," speculating in the stocks and options of companies involved in takeover battles or mergers. Referring to the insider-trading charges, Gilbert said: "In the business of risk arbitrage, information is like gold, and Ivan Boesky was willing to share his gold with John Mulheren."
Concerning the parking charges, Gilbert said that they involved false sales of securities by Boesky's firm, Seemala Corp., to Jamie Securities, so that it would appear that Seemala no longer owned the securities. That enabled Boesky to claim tax losses and to evade Securities and Exchange Commission rules concerning capital requirements for securities firms. But Gilbert said that it also enabled Boesky secretly to retain ownership of the securities.
"John Mulheren agreed to help Boesky to have his cake and eat it too," Gilbert said.
Evidence in the trial, taking place in U.S. District Court in Manhattan, is expected to include false bills allegedly meant to hide illegal payments from Boesky's company to Jamie Securities.
Thomas Puccio, Mulheren's lawyer, called Boesky the "king of greed" and said he is someone who "cheated and lied to friend and foe alike." He charged that Boesky is "someone who 100 priests and rabbis could not corroborate in this case."
Puccio said that it was normal for people in the securities business to do favors for one another. But he said that Mulheren had never done any illegal favors. And he said a major theme of the defense case would be Mulheren's state of mind - that he never believed he was doing anything for Boesky that violated the law.
Mulheren was arrested in 1988 when he allegedly left his New Jersey home with a loaded rifle, intending, police say, to shoot Boesky. Mulheren allegedly was irate that Boesky was giving evidence against him.
by CNB