
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, May 25, 1990                   TAG: 9005250548
SECTION: BUSINESS                    PAGE: A8   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: NEW YORK                                LENGTH: Medium

CREDIBILITY OF BOESKY GETS TEST

Ivan Boesky testified that he wrote off on his income taxes half the $100 million penalty he paid to settle his insider trading case, and paid off other inmates to do his laundry while he was in prison.

Boesky was roughly cross-examined Thursday during his testimony in the securities fraud trial of his former associate, John Mulheren. The former speculator is the prime witness for the government, which alleges Mulheren broke the law to help Boesky cheat on his taxes and evade federal securities laws.

Defense attorney Thomas Puccio has tried to destroy Boesky's credibility by portraying him as a greedy liar who had turned on a former friend to save his own skin.

"I think we accomplished what we wanted to accomplish with Mr. Boesky," Puccio said at the end of the day.

Mulheren and Boesky were once close friends when Mulheren was an arbitrager at Jamie Securities. But the relationship soured when Boesky fingered Mulheren and other alleged co-conspirators as part of his plea bargain, under which Boesky pleaded guilty to one conspiracy charge, spent two years in prison and paid $100 million to the government.

On Thursday, Boesky revealed that he had deducted $50 million of the penalty from his 1986 income taxes. That amount had been a repayment of the illegal profits he reaped from insider trading in 1985. The other half of the penalty was a fine.

Boesky lawyer Charles Davidow said he did not know whether the deduction - taken as a capital expense - was legal, but he assumed Boesky's tax attorneys or accountants had reviewed it at the time.

U.S. District Judge Miriam Goldman Cedarbaum allowed defense attorneys to discuss the deduction to attempt to show that the penalty was not as painful or expensive as it appeared.

The disclosure of the $50 million tax deduction and his retention of money he earned from illegal insider trading raised questions Thursday in the minds of some officials about the severity of Boesky's punishment for the wide-ranging crimes he committed, as well as the terms of the agreement he reached with the Securities and Exchange Commission and the U.S. attorney.

"We are going to be asking the SEC some rather pointed questions about that," Rep. John Dingell said when asked about the disclosure of the financial impact of the settlement on Boesky. Dingell is chairman of the House Energy and Commerce Committee, which oversees the SEC.

Puccio asked Boesky a dozen times whether he has revealed to the government all of the crimes he ever committed. Boesky said he revealed all the crimes he was required to tell under the plea bargain.

He said his net worth fell from at least $100 million in 1986 to nearly nothing when he was sentenced in late 1987, but he would not say whether he transferred his funds to his wife, as Puccio suggested.

"I do not recally any financial activities of 1986," he said repeatedly.

He also denied committing any wrongdoing with his money to avoid having to pay $1 billion in damages to parties that have sued him. Boesky said none of those lawsuits has been settled.

Boesky did admit one violation: he said he broke a prison rule by paying someone else to do his laundry. "There were a couple of chaps who did laundry there and I gave them a few quarters to do my laundry," he said.

by CNB