Ivan F. Boesky, the brash investor who came to symbolize Wall Street greed as a central figure in the insider trading scandals of the 1980s and was jailed for his misdeeds, died Monday. He was 87 years old.
His death was confirmed by his daughter, Marianne Boesky. She did not provide further details.
Mr. Boesky, the inspiration for the character Gordon Gekko in Oliver Stone's film “Wall Street” and its sequel, made a fortune betting on stock predictions, often trading illegally for suitcases of cash. passed to. His guilty plea to insider trading in November 1986 and then-record $100 million fine shocked Wall Street and signaled the end of a decade of frenzied and high-profile takeover activity. caused. wealth.
As federal agents closed in on Mr. Boesky, he agreed to cooperate, providing information that led to the downfall of investment bank Drexel Burnham Lambert and its junk-bond magnate Michael Milken.
Mr. Boesky has brought an aggressive style to the once-silent world of arbitrage (buying and selling stock in potential acquisition targets). He sniffed out an impending deal and amassed stock positions at unprecedented levels.
At its height in the mid-1980s, his net worth was $280 million (approximately $818 million in today's currency) and his trading portfolio was worth $3 billion (approximately $8.7 billion in today's currency). most of which was financed with borrowed funds. . His home was a large estate in Westchester County, New York, and his main house was decorated with portraits of Renoir and carpets embossed with his monogram, “IFB.” (The property was once owned by the Revson family, founders of Revlon Cosmetics, and before that by the Strauss family, behind Macy's.)
In addition to Pier Terre in Manhattan, there was a hideaway on the Côte d'Azur, a luxury apartment in Paris, and a condo in Hawaii. Through his first wife Seema Boesky, he became part owner of the famous Beverly Hills Hotel. The Beverly Hills Hotel is a luxurious pink hotel favored by Hollywood stars as well as financial titans who attend Drexel Burnham's annual gathering, the Predator's Ball.
Mr. Boesky sleeps only two to three hours a night, wakes up at 4:30 a.m. to exercise, and then rides a limousine to his New York office, where he runs an array of video terminals, news wires and stock tickers. He claimed to be in command. It also used 160 phone lines and a series of screens to ensure employees were always visible and heard. He wore the same clothes every day. He wore a distinctive three-piece black suit and starched white shirt, with a gold chain dangling from his vest pocket. He preferred to stand all day rather than sit and ate very little, consuming large amounts of coffee instead.
“Greed is healthy”
On Wall Street, it was a decade born of greed. Buoyed by the easy money of junk bonds, a handful of kingmakers, including Carl Icahn, T. Boone Pickens, James Goldsmith, Saul Steinberg, Mr. Boesky, and Mr. Milken, developed financial engineering and corporate schemes. He became surprisingly wealthy through his involvement in the. The raids that drove the stock market to dizzying levels before the 1987 crash.
Mr. Boesky embraced the go-go spirit of the time. “Greed is okay, by the way,” he told UC Berkeley business school students in his 1986 commencement speech. You can be greedy and still be satisfied with yourself. ” He was greeted with thunderous applause.
A year later, those words were immortalized on screen in “Wall Street.” It depicts corrupt corporate raider Gordon Gekko (played by Michael Douglas) delivering his famous “greed is good” speech.
“All that mattered to Ivan Boesky was making money,” Jeff Mudrick, author of “The Age of Greed” (2011), said in a 2019 interview for the obituary. “He found his way there and abused it horribly.”
Mr. Boesky touted his success as much as he could. In 1985 he published his book Merger Mania, touting his deal-making skills and uncanny ability to identify the next acquisition target. But behind Mr. Boesky's success was a story of deception. He had paid others to provide him with insider information.
One of his biggest sources was Martin Siegel, then an investment banker at Kidder, Peabody & Company. The two hatched a plan in 1982, and soon Mr. Boesky had a courier deliver a suitcase filled with $100 bills to Mr. Siegel in exchange for inside information about the upcoming acquisition. The first time was $150,000, the second time was $200,000, and the third time was $400,000. The deliveryman delivered the suitcase to Mr. Siegel in the lobby of Manhattan's Plaza Hotel, using the terms “red light” and “green light” to deliver it.
But by 1986, Mr. Boesky's world began to unravel. When junior Drexel banker Dennis Levine was indicted on insider trading charges in May, federal prosecutors discovered Mr. Boesky's name in his notes. He was tipping Mr. Levine. Mr. Boesky was being pursued by Rudolph W. Giuliani, a U.S. attorney who has defeated Mafia dons and unscrupulous politicians and is now focusing on Wall Street fraud.
In September 1986, Mr. Boesky was invited to one of the most extravagant bar mitzvahs in memory. For his son's celebration, real estate developer Gerald Gutterman paid nearly $1 million to rent the entire Queen Elizabeth 2 and take guests on a cruise up the Hudson River and into the Atlantic Ocean. Giant banners, clowns, musicians and 1,000 crew members greeted guests. But Mr. Boesky was nowhere to be seen.
Mr. Boesky claimed to have missed the departure and staged his arrival. A helicopter descended from the sky and landed on the ship. As the blades rattled, guests craned their necks to watch as Mr. Boesky appeared, dressed in a tuxedo and black tie, looking like a modern-day James Bond, and the host. It seemed like he was completely elevating the family.
The following day, September 17, Mr. Boesky surrendered to federal authorities and agreed to wear a wire during conversations with Mr. Milken and others on Wall Street.
the boy from detroit
Ivan Frederick Boesky was born March 6, 1937 in Detroit to Helen and William Boesky. His father was a Jewish immigrant from Russia. The family operated a series of restaurants under the name Brass Rail, which became strip clubs as the city declined. Eventually the business went bankrupt.
At age 13 and without a driver's license, Ivan earned two and a half cents driving an ice cream truck. (In later years, he named one of his investment vehicles Farnsworth & Hastings after the street corner location of his family's business.)
Ivan attended Cranbrook, a prestigious preparatory school in the suburbs of Detroit, for one year, where he excelled in wrestling and left an impression on many in later years that he was an alumnus. He actually moved out of Cranbrook and graduated from Mumford High School in middle-class Detroit.
He attended three universities: Wayne State University, University of Michigan, and Eastern Michigan University, but did not graduate from any of them. After dropping out twice, it took him five years to earn his degree from Detroit Law School in 1964. He used his connections to secure a one-year clerkship with a federal judge, but was rejected by a top law firm in Detroit and went to work as an accountant at the local firm of Touche Ross.
Mr. Boesky's 1962 marriage to Seema Silverstein, the daughter of real estate developer Ben Silverstein, who owned the Beverly Hills Hotel, catapulted him into the world of wealth and sophistication. He didn't find his professional footing until, at the age of 27, he heard about arbitrage from a former Cranbrook classmate who worked at Bear Stearns. Enthralled by the idea, he moved to New York, where his father-in-law bought the young couple a Park Avenue apartment.
He held various jobs as a trainee at the investment banking firm LF Rothschild, an analyst at First Manhattan Company, and an arbitrageur at Kalb, Vorhis, until he was fired for a loss of $20,000. In 1971, Mr. Boesky joined the brokerage firm Edwards & Hanley, where he first displayed his aggressive style, betting millions of dollars on single stock positions and shorting securities he didn't own. He was fined $10,000 for doing so.
By 1975, the company was bankrupt and Boesky decided to strike out on his own. With his $700,000 support from his wife's family, he founded his Ivan F. Boesky & Company.
Arbitrage businesses were accustomed to making small, cautious investments in announced acquisitions in hopes of increasing stock prices. But Mr. Boesky bet big.
He placed bets of millions of dollars ($10 million, sometimes more than $100 million) on companies he thought might be takeover targets before the deal was announced. He relied heavily on his debts and kept most of his profits for himself. His partner gets his 40 percent and he gets his 60 percent. The partner will absorb his 90 percent of the loss and he will get his 10 percent.
On Wall Street, he was given two nicknames: Piggy and Ivan the Terrible. He was known for going to fancy restaurants, ordering every dish on the menu, tasting it, and nibbling on one plate while ignoring the rest.
He once showed up to play tennis in a pink Rolls Royce. Even though he never attended Harvard University, he loved entertaining guests at the Harvard Club in Manhattan. (He is a major donor to the university's School of Public Health, has been appointed to the department's board of directors, and has earned club membership.) He told investors that he is an adjunct professor at Columbia Business School. Told. The school said that was not the case.
Mr. Boesky is estimated to have made an estimated $65 million from Chevron's purchase of Gulf, $50 million from Texaco's purchase of Getty, and $50 million from Philip Morris' purchase of General Foods. Other multi-million dollar home runs involved deals with Nabisco Brands, Union Carbide and Boise Cascade, some of which were aided by information the Securities and Exchange Commission said was illegally obtained. was.
Mr. Boesky's closest ally in the financial world was Mr. Milken, head of Drexel Burnham's legendary junk bond desk in Los Angeles. The two spoke daily, with Mr. Milken arranging much of the financing for Mr. Boesky's transactions, and Mr. Boesky becoming Mr. Milken's profit center. They were watching nearly every acquisition transaction, and their every move was followed in the economic press.
After Boesky turned himself in to federal investigators, he agreed to become a government informant in exchange for extenuating circumstances and wore wire when meeting with Milken, who had become an even bigger target for federal prosecutors. .
“Milken and Boesky were deeply involved in an extensive criminal conspiracy,” wrote James B. Stewart in his 1991 book Den of Thieves. “Taken together, these operations were a virtual catalog of securities crimes, beginning with insider trading and including false statements, tax evasion, market manipulation, and many more technical crimes.”
In the end, Mr. Milken also ended up in prison and had to pay a hefty $600 million fine. He was pardoned by President Donald J. Trump in February 2020.
a quieter life
Mr. Boesky pled guilty to insider trading charges in November 1986 and agreed to pay a $50 million fine and $50 million in repayment of illegal trading profits, totaling $100 million. (He was then able to deduct half of the $100 million fine from his income taxes.)
In December 1987, Mr. Boesky was sentenced to three years in prison. He spent 18 months at Lompoc Federal POW Camp, a minimum-security facility in Santa Barbara County, California, and then four months at a concentration camp in Brooklyn. While in prison, he studied Talmud and earned some extra money by working as a prison cleaner. He later admitted to violating prison rules by paying his fellow inmates to do their laundry.
He was released from prison in 1990. He was 53 years old. In 1991, his wife of 30 years sued him for divorce. He accused her of poverty and demanded half of her $100 million fortune. He settled for $20 million, with annual payments of $180,000 and a $2.5 million home in California.
For many years, Mr. Boesky lived quietly in San Diego's La Jolla neighborhood, where he remarried and became a father again.
In addition to his daughter Marianne, he has three sons from his first marriage, William, Theodore and Jonathan. his wife, Ana (Serrano) Boesky; Their daughter, Blue. and four grandchildren.
In a 1985 interview with the Washington Post, Mr. Boesky offered a surprisingly prescient view of his eventual downfall. “You can't predict your own death,” he said. “But I think it's going to happen out of the blue.” It did happen, and within a year he was arrested and charged with insider trading.
alex traub Contributed to the report.