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

DATE: SUNDAY, June 24, 1990                   TAG: 9006260399
SECTION: EDITORIAL                    PAGE: C-2   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

THE TRIAL OF JOHN MULHEREN

HE IS A 1971 graduate of Roanoke College who went out to set the world on fire. He became friends with the rich and famous. He made a lot of money speculating on Wall Street and settled a gob of it, $2.5 million, on his alma mater, becoming one of its biggest benefactors and serving on its board of trustees.

He is John Mulheren - and for the past month he has been on trial in New York City on 41 counts of conspiracy and securities fraud.

Mulheren is accused of helping Ivan Boesky, once called the king of arbitrageurs, manipulate stock prices and evade income taxes. Boesky, cooperating with prosecutors, has been the chief witness against him. The trial has proved a fascinating window into what was once their world.

The federal court will decide whether Mulheren is innocent or guilty of any of the charges. But at a youthful 40, he's already been up and down. He has lived high - and shared his wealth. He has also seen what can happen when people eager for profit reach too far. One of those was Boesky, Mulheren's former business associate.

Stock speculation is a gamble that's made a lot safer if one knows a lot about the companies in question. Federal law forbids insider trading: dealing in stocks on the basis of information not yet available to the public. The one who can tap into this kind of intelligence is in position to make a killing - and to wreak injury on others in the market.

The temptation to skirt or violate the insider-trading law is too much for some people. For years it seemed that Boesky prospered by a combination of luck and shrewdness. As an arbitrageur, he had an uncanny ability to spot companies that would be involved in mergers or takeover battles. Not until others got caught and fingered him did it become evident that he too was guilty of insider trading. The man who glorified greed had been a bit too greedy.

Boesky seems to have got a pretty good deal from the prosecutors. He pleaded guilty in 1986 to one felony count, was sentenced to three years in prison and paid $100 million in penalties: half of that a fine, the rest a repayment of illegal profits. But he avoided prosecution on a string of other charges, served just two years behind bars, and he deducted from his taxes the $50 million he'd repaid in profits.

Moreover, he admitted during Mulheren's trial, Boesky had been able to hold onto millions more of his ill-gotten gains. He even paid fellow prisoners "a few quarters" to do his laundry - a violation of prison regulations.

Boesky's reputation has been stained. But he has not suffered overly much. He's still wealthy. He still has friends, albeit no longer John Mulheren. Petty criminals often evade the wages of their sins, but the justice system also can be kind to white-collar crooks.

If there are those on Wall Street looking for lessons from Boesky's career, they may not be much deterred by his fate. Meantime, Mulheren has already been touched by Boesky's fate. His own hangs in the balance.

by CNB