Ivan F. Boesky, the flamboyant stock trader whose cooperation with the government exposed one of the biggest insider trading scandals in Wall Street’s history, passed away at the age of 87.
A representative from the Marianne Boesky Gallery, owned by Ivan Boesky’s daughter, has confirmed the passing of Ivan Boesky. However, no further information has been disclosed at this time.
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Boesky, the son of a Detroit delicatessen owner, used to be regarded as one of the wealthiest and most powerful risk-takers in the realm of Wall Street. With a starting capital of $700,000 inherited from his late mother-in-law’s estate, he managed to amass a fortune that was estimated to be over $200 million, propelling him to the esteemed ranks of Forbes magazine’s prestigious list of the 400 richest individuals in America.
Once involved in insider trading, Boesky worked with a confident and ambitious U.S. attorney named Rudolph Giuliani to seek leniency. Together, they exposed a scandal that not only destroyed promising careers but also tarnished the reputations of several esteemed investment brokerages. The aftermath of this revelation left the securities industry in a state of unease and suspicion.
Working undercover, Boesky recorded three conversations with Michael Milken, the infamous “junk bond king” who had transformed the credit markets through his association with Drexel Burnham Lambert. Milken later admitted to six felonies and served a prison term of 22 months. Boesky, on the other hand, was fined $100 million and spent 20 months in a minimum-security California prison known as “Club Fed,” starting from March 1988.
During a commencement address at the University of California at Berkeley in 1985 or 1986, Boesky allegedly made a controversial statement that gained significant attention after his arrest. According to accounts, he supposedly said, “Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself.”
Michael Douglas famously echoed this line in his award-winning performance as Gordon Gekko, an ambitious trader, in Oliver Stone’s 1987 film “Wall Street.”
“Greed, ladies and gentlemen, is good,” Douglas asserts to the shareholders of Teldar Paper. He firmly believes that greed is not only beneficial but also essential. According to him, greed serves as a driving force that brings clarity, cuts through obstacles, and embodies the essence of the evolutionary spirit.”
Boesky, on the other hand, claimed to have no recollection of ever uttering the phrase “greed is healthy” and refuted another quote attributed to him in the 1984 Atlantic Monthly. According to the publication, he supposedly claimed that ascending a massive stack of silver dollars would be “an aphrodisiac experience.”
Despite his usual routine of working 18-hour days, Boesky, with his silver hair and lean figure, embraced a life of luxury. He indulged in designer clothing, traveled in lavish limousines, private airplanes, and helicopters, and even transformed his 10,000-square-foot Westchester County mansion into a magnificent residence resembling Monticello, complete with a Jeffersonian dome.
During his 1993 divorce proceedings, Boesky mentioned that there was an abundance of materiality at his disposal. He revealed that they owned properties in various locations such as Palm Beach, Paris, New York, and the south of France.
Boesky, a risk-taker and expert in arbitrage, amassed a fortune by placing strategic bets on stocks that were likely to be acquired by other companies. However, it was later revealed that some of his insider tips originated from the mergers and acquisitions departments of Drexel Burnham Lambert Inc. and Kidder, Peabody & Co.
Dennis Levine from Drexel and Martin Siegal from Kidder, Peabody provided Boesky with insider information in exchange for a share of the profits, either 1% or 5%.
Boesky gave Siegal a total of $700,000 in three separate payments. The money was delivered discreetly through a courier who handed over briefcases filled with cash. These secretive transactions took place at various locations, including a street corner and the lobby of the Plaza Hotel in Manhattan. Boesky had greatly profited from the insider information provided by Siegal, which included valuable tips about potential takeovers of companies like Getty Oil and Carnation Co.
Before Levine could receive his payout, he was arrested for his involvement in insider trading. In an effort to avoid severe penalties under racketeering statutes, Levine decided to cooperate with authorities and provided them with detailed information. The arrest of Levine also prompted Boesky to come forward and cooperate as well. As a result, their revelations led to convictions or guilty pleas in various cases, including those involving former stockbroker Boyd Jefferies, Siegel, four executives of Britain’s Guiness PLC, takeover strategist Paul Bilzerian, stock speculator Salim Lewis, and other individuals.
One of the most significant arrests was that of Milken, a trailblazing financier who revolutionized capital markets in the 1970s by introducing a novel type of bond that enabled numerous mid-sized companies to secure funding.
During the 1980s, Michael Milken utilized “junk” bonds to fund numerous leveraged buyouts. This included well-known companies such as Revlon, Beatrice Companies, RJR Nabisco Inc., and Federated Department Stores. As a result, Milken became both reviled and feared within the realm of Wall Street.
The financier and philanthropist faced serious charges, including securities and mail fraud, insider trading, racketeering, and making false statements. According to prosecutors, Milken and Boesky collaborated to manipulate securities prices, rig transactions, and evade taxes and regulatory requirements.
Milken eventually admitted to committing six securities violations, which included making a promise to Boesky that he would compensate for any losses Boesky incurred while trading the stock of Fischbach Corp, a company that was being targeted for a takeover at that time.
Boesky’s cooperation was hailed by prosecutors as a significant breakthrough in their pursuit of securities law violations. In fact, they claimed that the information he provided was the most comprehensive since the legislative hearings that resulted in the enactment of the 1933 and 1934 Securities Acts.
According to the police, John Mulheren Jr., a Wall Street executive, loaded an assault rifle when he believed that he would be implicated. His intention was to kill Boesky and Boesky’s former head trader. However, Mulheren was apprehended while he was on his way.
During the trial, Mulheren’s lawyer, Thomas Puccio, strongly criticized Boesky, accusing him of being a habitual liar and describing him as a despicable person. Puccio argued that Boesky had a strong incentive to say whatever he could to help federal authorities in order to receive a lighter sentence.
According to Puccio, Ivan Boesky is a fitting candidate for the title “Prince of Darkness.” Puccio describes him as the epitome of greed, a person solely driven by his own ambition and desire for wealth.
Mulheren was convicted by the jury, but later his conviction was overturned. Along with his conviction, other verdicts were also reversed, including those of GAF Corp. and a senior executive, five principals of Princeton-Newport Partners, and a former Drexel trader.
The reversals have strengthened the claims of free-traders who assert that Wall Street was targeted by a federal prosecutor seeking attention, utilizing racketeering statutes typically employed to combat organized crime. Historically, the government had shown limited interest in regulating insider trading, leading some to argue for its legalization.
In his article for Fortune, Levine expressed his bewilderment at Boesky’s decision to engage in such clearly illegal activities, involving payoffs in the form of suitcases filled with cash.
In 1990, Levine pondered the motives behind Ivan’s involvement in illegal activities, considering that he had amassed a fortune of over $200 million. Levine believed that Ivan’s wealth was primarily derived from legitimate endeavors, such as his proficiency in arbitrage and unwavering dedication to his work. However, the question remained as to what drove Ivan to engage in actions that defied rational behavior.
During his sentencing in 1987, Boesky’s lawyer cited his psychiatrist’s observation that Boesky had started to realize his abnormal and compulsive need to prove himself. The psychiatrist further noted that this need stemmed from a sense of inadequacy or inferiority rooted in Boesky’s childhood.
After being released from a Brooklyn halfway house in April 1990, Boesky and his wife Seema decided to end their 30-year marriage.
After paying fines, restitution, and legal fees, he claimed that he was left with no money. However, he managed to win a substantial settlement from his wife’s $100 million fortune. The settlement included $20 million in cash and $180,000 per year in alimony. Additionally, he was awarded a $2.5 million home in the La Jolla section of San Diego, where he resided with his childhood friend, Houshang Wekili.
Ivan Frederick Boesky, born in 1937 in Detroit, came from a family of Russian Jewish immigrants. Boesky credits his father, the owner of three delicatessens, for instilling in him a strong work ethic. Showing entrepreneurial spirit at a young age, Boesky purchased a 1937 Chevy truck at the age of 13. He painted it white and sold ice cream in Detroit parks, earning a weekly income of approximately $150 from nickels and dimes.
Boesky, who dropped out of college three times, enrolled in the Detroit College of Law in 1959. At that time, the college did not have a requirement for an undergraduate degree for admission. However, Boesky withdrew from the college twice before finally completing his degree after five years.
Boesky tied the knot with Seema Silberstein during his time in law school. Seema is the daughter of Ben Silberstein, a renowned real estate developer and the proud owner of the Beverly Hills Hotel.
In 1966, Boesky and his wife made the move to New York after being unable to secure employment at any major Detroit law firm. They had their first child at this time, and Boesky found himself moving from one job to another on Wall Street.
In 1975, Boesky ventured out on his own and established a small brokerage firm. Over time, he transformed this modest venture into a vast network of investment companies, employing over 100 individuals. Boesky dedicated countless hours of hard work, actively engaging in self-promotion through interviews with newspapers. Additionally, he authored a book in 1985 titled “Merger Mania.”
He was not only a successful philanthropist but also actively supported Jewish causes. He generously donated $20 million to establish a library at the Jewish Theological Seminary, which was later renamed in his honor.
