Ivan F. Boesky, a prominent stock trader known for his extravagant lifestyle, has passed away at the age of 87. Boesky gained notoriety for his involvement in a major insider trading scandal, which ultimately led to significant repercussions in the world of Wall Street.
The death of Ivan Boesky, father of the owner of Marianne Boesky Gallery, has been confirmed by a representative at the gallery. No additional information has been provided at this time.
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Boesky, the son of a Detroit delicatessen owner, was once hailed as one of the wealthiest and most influential risk-takers in the realm of Wall Street. With a starting capital of $700,000 from his late mother-in-law’s estate, he managed to amass a staggering fortune worth over $200 million. His financial prowess propelled him into the esteemed ranks of Forbes magazine’s coveted list of the 400 richest Americans.
Implicated in insider trading, Boesky worked with a bold young U.S. attorney named Rudolph Giuliani to seek leniency. Their collaboration led to the exposure of a scandal that not only shattered promising careers but also tarnished the reputation of some of the most respected U.S. investment brokerages. As a result, the securities industry was infused with a sense of paranoia.
Boesky, working covertly, recorded three conversations with Michael Milken, commonly known as the “junk bond king,” whose groundbreaking contributions to the credit markets were made during his tenure at Drexel Burnham Lambert. Milken, later on, admitted guilt to six felonies and served a 22-month prison sentence, while Boesky, who paid a hefty $100 million fine, spent 20 months in a minimum-security California prison humorously referred to as “Club Fed,” starting in March 1988.
During a commencement address at the University of California at Berkeley in either 1985 or 1986, Boesky allegedly made a controversial statement that sparked widespread discussion. He supposedly told business students, “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.” This quote quickly gained attention and became a topic of debate.
Michael Douglas immortalized the line when he delivered it in his award-winning performance as Gordon Gekko, a successful trader, in Oliver Stone’s iconic 1987 film “Wall Street.”
“Ladies and gentlemen, the essence of the evolutionary spirit can be summed up in one word: greed,” Douglas passionately declares to the shareholders of Teldar Paper. He firmly believes that greed is not only good but also essential for success. Greed has the power to clarify, cut through, and capture opportunities, ultimately driving progress forward.
According to Boesky, he cannot recall making the statement “greed is healthy” and he also denies another quote attributed to him in the 1984 Atlantic Monthly. In the alleged quote, he supposedly claimed that reaching the top of a large pile of silver dollars would be “an aphrodisiac experience.”
Despite his usual routine of working 18-hour days, Boesky, with his silver hair and slim physique, indulged in a life of luxury. He adorned himself in designer attire and traveled in lavish limousines, private airplanes, and helicopters. Not only that, he even transformed his 10,000-square-foot mansion in Westchester County, adding a Jeffersonian dome to give it a striking resemblance to Monticello.
During his 1993 divorce proceedings, Boesky mentioned the significant amount of materiality that was available to him. He highlighted the various locations they owned, including Palm Beach, Paris, New York, and the south of France.
Boesky, a daring arbitrageur, amassed a fortune by investing in stocks that were likely to be acquired by other corporations. However, it was later revealed that some of his insider information came from the mergers and acquisitions divisions of Drexel Burnham Lambert Inc. and Kidder, Peabody & Co.
Dennis Levine, an executive at Drexel, and Martin Siegal, a representative from Kidder, Peabody, provided Boesky with classified information in exchange for a share of the profits, ranging from 1% to 5%.
Boesky delivered $700,000 to Siegal in three separate payments. The money was transported by a courier who discreetly handed over briefcases filled with cash. The exchanges took place in clandestine meetings, occurring on a street corner and in the lobby of the Plaza Hotel in Manhattan. Thanks to Siegal’s insider tips, Boesky had earned millions, particularly from information regarding potential takeovers of Getty Oil and Carnation Co.
Levine’s anticipated payout was cut short when he was apprehended for his involvement in insider trading. Faced with severe consequences under the government’s racketeering laws, Levine decided to cooperate and divulge all the information he had. Boesky, too, started talking, which resulted in a series of convictions and guilty pleas. These cases included former stockbroker Boyd Jefferies, Siegel, four executives from Britain’s Guiness PLC, takeover strategist Paul Bilzerian, stock speculator Salim Lewis, and several others.
Milken, the pioneering financier who revolutionized capital markets in the 1970s with a groundbreaking bond, was the most notable arrest. His innovative financial instrument enabled thousands of mid-sized companies to access crucial funding.
During the 1980s, Michael Milken utilized “junk” bonds to fund numerous leveraged buyouts, which included major companies like Revlon, Beatrice Companies, RJR Nabisco Inc., and Federated Department Stores. As a result, Milken became a highly disliked and feared individual within the Wall Street community.
Michael Milken, the financier and philanthropist, faced a staggering 98-count indictment. The charges against him included securities and mail fraud, insider trading, racketeering, and making false statements. Prosecutors alleged that Milken and Boesky collaborated in a scheme to manipulate securities prices, engage in fraudulent transactions, and evade taxes and regulatory obligations.
Milken admitted to committing six securities violations, which included his promise to Boesky that he would compensate for any losses Boesky incurred while trading the stock of Fischbach Corp, which was a company being targeted for takeover.
Boesky’s cooperation was hailed by prosecutors as the most significant source of information on securities law violations since the hearings that resulted in the enactment of the Securities Acts in 1933 and 1934.
John Mulheren Jr., a Wall Street executive, was apprehended while en route after police discovered that he had armed himself with an assault rifle. He allegedly planned to kill Boesky, as well as Boesky’s former head trader, in fear of being implicated.
During the trial, Mulheren’s lawyer, Thomas Puccio, strongly criticized Boesky, referring to him as a habitual liar and a despicable individual who was willing to say anything in order to obtain leniency from federal authorities.
Ivan Boesky has been referred to as the embodiment of the title “Prince of Darkness,” according to Puccio. Puccio describes him as the epitome of greed, a person who was driven solely by his own ambition and desire for wealth.
Mulheren was convicted by the jury, but his conviction was later overturned. Similarly, the convictions of GAF Corp. and a senior executive, as well as five principals of Princeton-Newport Partners, and a former Drexel trader were also reversed.
The reversals strengthened the case of advocates for free trade who asserted that Wall Street had become a target of a fame-seeking federal prosecutor who applied racketeering laws typically used to combat organized crime. Historically, the government had not done much to regulate insider trading, leading some to argue for its legalization.
But defending payoffs involving suitcases full of cash is something no one could do. After his release, Levine, in his writings for Fortune, expressed his confusion over why Boesky would take such a risk by getting involved in something that was clearly illegal.
In 1990, Levine pondered over the perplexing question of why Ivan would involve himself in illegal activities despite his vast fortune of more than $200 million. Levine acknowledged that Ivan had likely accumulated a significant portion of his wealth through legitimate means, as he possessed a knack for arbitrage and was deeply committed to his work. However, Levine couldn’t help but wonder what motivated Ivan to engage in such irrational behavior.
After settling legal matters and covering fines, restitution, and legal fees, he found himself in a state of financial destitution. However, his fortunes took a turn when he received a remarkable $20 million in cash and an annual alimony of $180,000 from his wife’s $100 million wealth. Additionally, he was awarded a stunning $2.5 million home in the beautiful La Jolla neighborhood of San Diego. In this luxurious abode, he resided with his lifelong companion, Houshang Wekili.
Ivan Frederick Boesky, born in 1937 in Detroit, came from a family of Russian Jewish immigrants. Boesky credits his father for instilling in him a strong work ethic, as his father successfully operated three delicatessens. At just 13 years old, Boesky took his entrepreneurial spirit to the next level by purchasing a 1937 Chevy truck, painting it white, and selling ice cream in Detroit parks. This venture brought him around $150 per week in 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 prominent real estate developer and the proud owner of the Beverly Hills Hotel.
In 1966, Boesky and his wife relocated to New York after being unsuccessful in securing a job with a prominent law firm in Detroit. Once in New York, Boesky found himself navigating various positions on Wall Street.
In 1975, Boesky ventured into entrepreneurship by establishing his own small brokerage firm. Over time, he transformed it into a vast network of investment companies, employing over 100 individuals. Boesky dedicated extensive hours to his work, actively engaging in self-promotion by granting interviews to newspapers. In 1985, he even authored a book titled “Merger Mania.”
He was not only a successful businessman but also a dedicated philanthropist, particularly when it came to supporting Jewish causes. In fact, he generously donated a staggering $20 million to establish a library at the Jewish Theological Seminary, which was subsequently renamed in his honor.
