Ivan F. Boesky, the flamboyant stock trader whose collaboration with the government exposed one of the biggest insider trading scandals in Wall Street history, has died at the age of 87.
A representative of the Marianne Boesky Gallery, owned by Ivan Boesky’s daughter, confirmed his death. No other details were given.
Boesky, the son of a Detroit delicatessen owner, was once considered one of the wealthiest and most influential risk-takers on Wall Street. He had turned $700,000 from his late mother-in-law’s estate into a fortune estimated at more than $200 million, landing him on Forbes magazine’s list of the 400 richest Americans.
Once implicated in insider trading, Boesky teamed up with a brash young American lawyer named Rudolph Giuliani in an effort to gain leniency, uncovering a scandal that destroyed promising careers, smeared some of America’s most respected investment brokerages and injected a certain paranoia into the securities industry.
Working undercover, Boesky secretly recorded three conversations with Michael Milken, the so-called “junk bond king” whose work with Drexel Burnham Lambert revolutionized the credit markets. Milken eventually pleaded guilty to six felonies and served 22 months in prison, while Boesky paid a $100 million fine starting in March 1988 and spent twenty months in a minimum security prison in California nicknamed “Club Fed.”
Linked to Gordon Gekko
After Boesky’s arrest, stories circulated that he had told business students during a speech at the University of California, Berkeley in 1985 or 1986, “Greed is all right, by the way.” I want you to know that. I think greed is not a problem. is healthy. You can be greedy and still feel good about yourself.”
This phrase was memorably repeated by Michael Douglas in his Oscar-winning portrayal of Gordon Gekko, a high-flying trader, in Oliver Stone’s 1987 film Wall Street.
“The point is, ladies and gentlemen, that greed, for lack of a better word, is good,” Douglas told Teldar Paper shareholders. “Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary mind.”
However, Boesky said he did not recall saying that “greed is healthy” and denied another quote attributed to him in the 1984 Atlantic Monthly in which he reportedly said that climbing to the height of a huge pile silver dollars ‘an aphrodisiac experience.”
While he usually worked 18 hours a day, the silver-haired and thin Boesky also lived a life of opulence. He wore designer clothes, traveled in limousines, private planes and helicopters and updated his 10,000-square-foot mansion in Westchester County with a Jeffersonian dome that resembled Monticello.
“There was a very significant amount of materiality available,” Boesky said during his divorce proceedings in 1993. “We had places in Palm Beach, Paris, New York, the south of France.”
Briefcases stuff with cash
Boesky was an arbitrageur, a risk taker who made millions betting on stocks believed to be targets for corporate takeovers. But some of his tips came from Drexel Burnham Lambert Inc.’s mergers and acquisitions departments. and Kidder, Peabody & Co.
Dennis Levine of Drexel and Martin Siegal of Kidder, Peabody gave Boesky confidential information in exchange for a promised profit cut of 1% or 5%.
Boesky paid Siegal $700,000 in three installments, with a courier delivering suitcases full of cash to three clandestine meetings on a street corner and in the lobby of the Plaza Hotel in Manhattan. Boesky had made millions from Siegal’s tips, including the news that Getty Oil and Carnation Co. were ripe for takeovers.
Levine was arrested before his payout could arrive, stumbling over his own insider trading. Facing stiff penalties under government racketeering statutes, Levine revealed all and Boesky started talking too, providing information that led to convictions or guilty pleas in cases involving former stockbroker Boyd Jefferies, Siegel, four executives of the British Guiness PLC, takeover strategist Paul Bilzerian, shares were involved. speculator Salim Lewis and others.
The most notable arrest was that of Milken, the pioneering financier who had transformed capital markets in the 1970s with a new form of bonds that helped thousands of mid-market companies raise money.
In the 1980s, these “junk bonds” were used to finance thousands of leveraged takeovers, including Revlon, Beatrice Companies, RJR Nabisco Inc. and Federated Department Stores, which made Milken a hated and feared figure on Wall Street.
The financier and philanthropist was indicted on 98 counts, including securities and mail fraud, insider trading, racketeering and making false statements. Prosecutors said Milken and Boesky conspired to manipulate security prices, rig transactions and evade taxes and regulatory requirements.
Milken ultimately pleaded guilty to six violations of securities laws, including telling Boesky he would cover any losses he suffered trading the stock of Fischbach Corp., a takeover target at the time.
Prosecutors said Boesky’s cooperation has given the government the most information about securities law violations since the hearings that led to the Securities Acts of 1933 and 1934.
Aimed at death
When John Mulheren Jr. feared he might be implicated, the Wall Street executive loaded an assault rifle with the intention of killing Boesky and Boesky’s former chief trader, police said. Mulheren was captured along the way.
During the trial, Mulheren’s attorney, Thomas Puccio, called Boesky a repeat liar and a “pile of human garbage,” who was motivated to say anything to assist federal authorities in exchange for leniency.
“If there was ever anyone to whom the title Prince of Darkness could be applied, Ivan Boesky is that man,” Puccio said. “The king of greed, a person who stood for nothing but his own ambition, his own greed.”
The jury convicted Mulheren, but his conviction was later overturned. Other convictions were also overturned: that of GAF Corp. and a senior executive, five directors of Princeton-Newport Partners and that of a former Drexel trader.
The reversals strengthened the arguments of free traders who claimed that Wall Street had fallen victim to a publicity-oriented federal prosecutor who employed racketeering statutes usually reserved for fighting organized crime. The government had previously done little to control insider trading, and some argued that it should be legalized.
But no one could defend payouts involving suitcases full of cash. Levine, writing in the pages of Fortune after his release, said he could not understand why Boesky would take so much risk by engaging in something so clearly illegal.
“And I don’t know why Ivan engaged in illegal activities when he had a fortune estimated at more than $200 million,” Levine wrote in 1990. “I’m sure he got much of his wealth from legitimate businesses: he was skilled in arbitration. and obsessed with his work he must be driven by something beyond rational behavior.”
At his sentencing in 1987, Boesky’s attorney quoted his psychiatrist as saying that Boesky “began to recognize that he suffered from an abnormal and compulsive need to prove himself, to overcome a sense of inadequacy or inferiority rooted in his childhood” .
Lands on his feet
Three years after his release from a Brooklyn halfway house in April 1990, Boesky and his wife Seema divorced after 30 years of marriage.
He claimed he was left destitute after paying fines, restitution and legal fees, and won $20 million in cash and $180,000 a year in alimony from his wife’s $100 million fortune. He also got a $2.5 million house in San Diego’s La Jolla neighborhood, where he lived with his childhood friend Houshang Wekili.
Ivan Frederick Boesky was born in Detroit in 1937 to a family of Russian Jewish immigrants. Boesky said he learned the industriousness from his father, who operated three delis. At age 13, Boesky bought a 1937 Chevy truck, painted it white and sold ice cream from it in Detroit parks, earning about $150 a week in nickels and dimes.
Having dropped out of college three times, Boesky entered the Detroit College of Law in 1959, which then did not require a bachelor’s degree. He withdrew twice before graduating five years later.
While in law school, Boesky married Seema Silberstein, the daughter of Ben Silberstein, a real estate developer and the owner of the Beverly Hills Hotel.
Unable to find a job at a major Detroit law firm, Boesky moved to New York with his wife and the first of their four children in 1966, where he drifted from job to job on Wall Street.
In 1975, Boesky struck out on his own, opening a small brokerage that he eventually expanded into a sprawling group of investment companies with more than a hundred employees. He worked grueling hours, gave interviews in self-promotional newspapers and wrote a book in 1985 called “Merger Mania.”
He was also an active philanthropist, especially with Jewish causes, and donated $20 million to a library at the Jewish Theological Seminary, which was later renamed.
