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SEC v. DREXEL BURNHAM LAMBERT INC.

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


December 1, 1993

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
DREXEL BURNHAM LAMBERT INCORPORATED; DREXEL BURNHAM LAMBERT GROUP INCORPORATED; MICHAEL R. MILKEN; LOWELL J. MILKEN; CARY J. MAULTASCH; PAMELA R. MONZERT; VICTOR POSNER; STEVEN N. POSNER; AND PENNSYLVANIA ENGINEERING CORPORATION, Defendants.

The opinion of the court was delivered by: MILTON POLLACK

OPINION and Findings (in part)

 Milton Pollack, Senior District Judge

 This suit involves a subsidiary chapter to be completed in relation to well documented legal history of the scandalous conduct of Drexel Burnham and Michael Milken in the 1980's. This chapter is part of the larger story and deals with the oft-enjoined predatory conduct of Victor Posner, his son Steven Posner and their controlled corporation Pennsylvania Engineering Corp. ("PEC"), until the latter's bankruptcy in 1992.

 This suit was commenced in 1988 following the revelations of Ivan Boesky in 1986 and 1987, which landed him in jail in 1987. The claims against the defendants Posner and PEC marked time while the SEC was busy clearing up the claims against the other defendants named herein. Those others included Drexel, Michael Milken, Lowell Milken, Carey Maultasch and Pamela Monzert, all of whom ultimately were cast in judgment and permanently enjoined from violating the United States Securities and Exchange Act and the Securities Act. Additionally, Drexel was required to disgorge the sum of $ 350 million and Michael Milken disgorged the sum of $ 400 million.

 This left only the Posners and PEC to be dealt with in this litigation. During attention to those defendants, the SEC had vainly in a five-year period sought depositions and production of records from the Posners and PEC, only to be rebuffed with refusals based upon the Fifth Amendment privilege against giving testimonial data. Just before trial, the Posners in a grandiose gesture, announced that they would be prepared to testify at trial. Their refusal to participate in discovery proceedings before trial entitled and obtained for the SEC an order of preclusion against the Posners from testifying at trial; having denied an opportunity to SEC to depose and obtain discovery before trial, the SEC was entitled to an order depriving the Posners of a trial opportunity belatedly to come in with a version of their concealed story that had not been pre-tested.

 Nonetheless, efforts to wind up the complicity of those defendants by consent procedures were extended before trial, but did not bear fruit. The trial commenced and was completed in June, 1993. The trial was highlighted with the testimony of the witness, Ivan Boesky, called by the SEC and with the witness, Michael Milken (hereafter "Milken"), called by the Posners to the stand.

 The case charged the Posners and PEC with a host of violations of reporting, record keeping and the anti-fraud provisions of the U.S. Securities Laws and the Rules promulgated thereunder. The violations which are dealt with initially herein, occurred in the context of the Posners' efforts to gain control by illegal means of Fischbach Corporation, a listed company on the New York Stock Exchange. The incumbent management opposed the efforts of the Posners and the violations involved Ivan Boesky and his Organization which engaged in buying and parking voting stock of Fischbach for the benefit of the Posners, with the understanding that Boesky was at no risk of loss in the transactions and would recover his outlays and costs to carry.

 This action represents the third time that the Posners have been sued by the SEC for engaging in violations of the Securities Laws. The first two times they consented to the issuance of injunctions prohibiting them from engaging in future violations of various anti-fraud and reporting provisions of the Federal Securities Laws akin to those violations involved in this suit. Because prior injunctions had failed to prevent them from engaging in further like violations and because the Posners have used and abused public companies, of which they are (or were) officers and directors, as vehicles to engage in rapacious and violative conduct repeatedly, and to unjustly enrich themselves unconscionably at the expense of the public shareholders, the SEC therefore here seeks an injunction barring them in the future from further serving in the capacities of officers and directors of public companies registered with the SEC. This type of relief is sought pursuant to the recently enacted statutes, Sections 101 and 201 of the Remedies Act amending Section 20(b) of the Securities Act and Section 21(d) of the Exchange Act, respectively, which provide express statutory authority for a federal court to bar or suspend individuals addicted to predatory and unprincipled conduct in respect of their management and control of public enterprises, from serving again as officers and directors in public companies registered with the Commission. The SEC also seeks an order requiring that these defendants shall disgorge the estimated amounts by which they were unjustly enriched in the processes in which they engaged at the expense of the public shareholders involved.

 Inasmuch as the initial discussion of this case turns on the filing of a Schedule 13D with the SEC, it is well to pause to explain Schedule 13D.

 The Federal Securities Laws require public disclosure of the accumulation of 5% or more of a class of voting securities of a public company by any individual, entity or group acting together. The purpose of this disclosure is to protect companies and the investing public by giving them notice of such accumulations because of their potential effect on control of the company or the price of the company's securities. Such disclosure must generally be made by filing a document known as a Schedule 13D with the SEC, no later than 10 business days following a 5% accumulation. A copy of the Schedule 13D must be mailed to the company whose securities have been accumulated. The Schedule 13D must be promptly updated when there is a 1% change in the size of the accumulation or a material change in the information contained in the filed Schedule 13D.

 The Fischbach Transactions:

 The prelude to the Fischbach transactions commenced in or about 1980, when the Posners and their dominated and controlled corporation, Pennsylvania Engineering Corporation ("PEC") started accumulating a sizable position in Fischbach. By March 20, 1980, PEC had filed a Schedule 13D with the SEC disclosing beneficial ownership of 10.53% of Fischbach's outstanding common voting stock. In August 1980, PEC and Fischbach entered into a so-called "Standstill Agreement" that PEC could not acquire more than 24.9% of Fischbach's outstanding voting securities unless a party not affiliated with PEC filed a Schedule 13D with the SEC indicating ownership of more than 10% of Fischbach's outstanding common stock, or made a filing pursuant to the Hart-Scott-Rodino Act "(H-S-R") indicating an intention to purchase over 10% of Fischbach's outstanding common stock.

 In September 1981, PEC filed an amended Schedule 13D, disclosing that it owned 24.8% of Fischbach's outstanding common stock. In December 1982, the Posners and PEC agreed to extend the term of the Standstill Agreement for an additional 5 years. Victor Posner, shortly thereafter, made it clear to his house counsel that he intended to gain control of Fischbach and to break the Standstill Agreement and ultimately gain 100% ownership. The evidence plainly indicated existence of Posner's intention and of a conspiracy among Drexel, Milken and the Posners formed to accomplish a breach of the Standstill Agreement as a preliminary to further stock acquisitions by PEC.

 Familiarity with the detailed findings of fact which accompany this opinion, will be assumed for purposes of the details spelling out the background and history of the transactions now to be discussed.

 In or about 1980 certain shareholders of Fischbach (the "Fischbach shareholders"), entered into an agreement (the "Standstill Agreement") with Fischbach. That agreement on one side involved the Posners and PEC, and on the other side, the Fischbach Corporation. It barred the Posners and PEC from acquiring more than a 24.9% interest in Fischbach. Under the terms of the Standstill Agreement however, the Fischbach shareholders were permitted to acquire more than a 24.9% interest in Fischbach if, among other things, a third-party (i) acquired more than 10% of the outstanding Fischbach voting securities, and (ii) reported such purchases to the SEC and Fischbach in a Schedule 13D filing.

 Drexel, Milken and the Posners entered into a conspiracy to accomplish Posner's purpose of breaking the Standstill Agreement and acquiring control of Fischbach. To carry out the plan, it was necessary to enlist others in the conspiracy who would be willing to acquire more than 10% of Fischbach's outstanding voting stock and who would file a Schedule 13D announcing such acquisition. That would bring about the demise of the Standstill Agreement.

 The first attempt in the plan was made through Executive Life Insurance Co., an insurance subsidiary of First Executive Corporation and its related companies who were important customers of Milken's High Yield Bond Department. In the latter part of 1983, Executive Life converted Fischbach convertible bonds which it owned to a 13% stake in Fischbach's common stock. It thereupon filed a Schedule 13G, which was the appropriate schedule for an insurance company to file. However, it would take a Schedule 13D to break the Standstill Agreement which barred the Posners from acquiring additional Fischbach stock. Accordingly, sixteen days later, plainly in an effort to repair the situation, First Executive filed a Schedule 13D alleging the same facts that it had asserted in its Schedule 13G. It then apparently offered its block of common stock of Fischbach for purchase but the Posners did not have the wherewithal or the credit in the market which would enable it to finance the transaction, and in short order First Executive, in December, 1983 sold its entire block of Fischbach stock, 523,467 shares, at $ 52 a share, the market price approximately, to Fischbach.

 While this result seemingly was not what was contemplated by the Posners, the latter shortly took the position that the act of filing of the Schedule 13D by Executive Life was enough to break the Standstill Agreement under its terms, and that they intended to accumulate additional shares of Fischbach up to 49.9% of the total number of shares outstanding.

 On April 24, 1984, PEC filed an action against Fischbach seeking a declaration that the Standstill Agreement was no longer in effect Fischbach responded two days later with a lawsuit of its own in which it alleged that the Standstill Agreement was still in effect because Executive Life was an insurance company which had acquired Fischbach stock for investment purposes, and thus, was not required to file a Schedule 13D. Unquestionably, Milken knew of First Executive's ownership of Fischbach convertible securities. In the uncertainty surrounding the affect of Executive Life's Schedule 13D on the PEC-Fischbach Standstill Agreement, Milken called upon arbitrageur Ivan Boesky, and employing Wall Street argot, he encouraged Boesky to step in and buy enough of the outstanding stock of Fischbach, more than 10%, which would trigger the breach of the Standstill Agreement. Milken assured Boesky that he would not lose any money if he did. Boesky reasonably understood that he was being sought to do a "parking" job at Milken's request, and that if he took a position in Fischbach, he would be "stopped out", i.e., that he would be "made whole" if the stock went down before it was delivered to the source for which the parking had occurred. Unquestionably, Boesky also reasonably understood that the Posners were part of the arrangement. Milken told Boesky he would arrange to have Steven Posner call him to discuss the Fischbach transaction, self-evidently to vouch for the arrangement. Steven Posner promptly telephoned and discussed the matter with Boesky, reassuring Boesky that he had nothing to worry about. Boesky reasonably understood that Steven Posner was representing the Posner family interests and, on April 24, 1984, in conformity with the arrangement proceeded at a rapid pace to acquire a substantial interest in Fischbach stock.

 During the period of Boesky's acquisition of Fischbach stock, Victor Posner was kept regularly informed by his senior in-house attorney, Edward Christenson, of the Boesky purchases of the Fischbach stock. Boesky periodically reported to Milken the status of the Fischbach investment that he was making, "where we stood in our accumulations". In these conversations with Boesky, Milken told Boesky that in his opinion "the more [Fischbach] stock you own, the higher price you would get." Boesky also occasionally spoke to Steven Posner about the purchases. Boesky continued to buy Fischbach stock and convertible debentures until he had purchased approximately 9.7% of Fischbach's outstanding common stock, at which time he stopped purchasing to make the required Hart-Scott-Rodino filing, seeking permission, which was granted, to purchase up to 15% of Fischbach's outstanding common stock. On June 29th, 1984 Boesky informed Milken of the green light obtained from H-S-R. Drexel also had been accumulating Fischbach stock which was added to the Boesky holdings, 145,000 shares, on July 9, 1984, thereby boosting his position above 10%. On July 10, 1984 Boesky filed the required amended Schedule 13D disclosing his ownership of 13.4% of the Fischbach stock. Christenson informed Victor Posner that a 13D had been filed by Boesky. Having bought in excess of the 10% he had been "engaged" to acquire, Boesky stopped buying Fischbach. Neither the original Schedule 13D filed by Boesky nor any of the amendments to it disclosed the arrangement between him, Milken and the Posners.

 Fischbach concluded that Boesky's amended Schedule 13D filing relieved PEC of the restrictions under the Standstill Agreement and discontinued its declaratory relief action against PEC.

 In July 1984, Drexel began the process of discussing financing for the Posners including the possibility of gaining total control of Fischbach. The team working on the project was led by Alan Brumberger in Drexel's New York office. Their analysis showed that PEC's earnings were weak relative to the amount of money that would be needed and that it would be difficult to finance the transaction. Sometime during the ensuing period it developed that Brumberger's colleague Steven Weinroth, did not want to do business with the Posner's altogether. Not only because they did not have strong credit, but because of their "controversial" reputation. In contrast Milken was in favor of proceeding. Milken prevailed.

 The market price of Fischbach stock began to drop sharply in the latter half of 1984 and got as low as $ 32 per share and Boesky kept up a regular and repeated demand for a takeout from the parking arrangement. In response, Milken kept on assuring him that there was no need to worry and reminded him that he was guaranteed against loss. Boesky repeated his concerns to Steven Posner, who also kept on reassuring him not to worry. Ultimately, after considerable time had elapsed, and the market price for the stock showed only a modest recovery, Boesky conveyed his desire to be taken out of the investment by March 1, 1985; he told Steven Posner that this date marked an internal problem for him.

 Arrangements were made by Drexel for a private placement to finance a takeover of the Boesky block without providing a clue to the parking deal and to meet a bank loan of PEC in connection with clearing up PEC's balance sheet for issuing its securities in the financing. A price for the block had to be set which could be published. Boesky's expenditures for the block were in the neighborhood of $ 52 per share but the stock was selling in the market at about $ 35 per share involving a loss of $ 6.5 million. Boesky and Milken sought to set a price which would not be too high in relation to the market price "so as to avoid making the transaction seem ridiculous". Victor Posner personally discussed with Milken among other things, the closing of the deal and the nominal price to be paid to Boesky and while Posner wanted to fix the price only a little bit above the market he agreed to set a price of $ 45 per share for the takeover. That price would reduce the loss to Boesky to approximately $ 2 million after crediting some gains realized by him on some Fischbach convertible debentures and would be taken care of in another way. Unquestionably it was deemed better to disassociate the takeover price from Boesky's actual costs and leave it to Milken to arrange reimbursement to Boesky for the shortfall some other way. Boesky and Milken mutually arranged a transaction to be carried out over-the-counter in London at $ 45 a share, which was roughly $ 9 per share higher than the price of the stock prevailing on the New York Stock Exchange ("NYSE"). PEC thereby picked up only about $ 3.6 million of the loss on Boesky's investment. On the following day the Posners took over from Drexel, through a NYSE transaction, 85,000 additional shares which Drexel had accumulated, at the NYSE price prevailing of $ 39,625. The total number of shares which the Posners thus acquired at the time was 590,687; PEC's subsidiary was the purchaser in each transaction. This manoeuvering left an unreimbursed loss to Boesky of about $ 2 million, which Milken and Drexel took care of in other ways later on to satisfy Boesky's reimbursement.

 Drexel underwrote and sold in a private offering approximately $ 56 million in securities issued by PEC'S subsidiary, Pennsylvania Acquisition Securities, to pay for the stock the Posners acquired from Boesky and Drexel and to pay off $ 18 million of PEC's debt to banks.

 Drexel received $ 3 million from the Posners in compensation. While one of Posners' executive's told Steven Posner that he considered the compensation to be too high, it had Victor Posner's express approval.

 The Criminal Prosecutions

 Boesky, Milken and Drexel were each charged with felonies growing out of the Fischbach transactions and each pleaded guilty to the charges.

 Boesky was charged with conspiracy to violate the Securities laws by filing false and inadequate Schedule 13D's which failed to disclose the secret arrangements for parking the stock and to reimburse Boesky for any losses on the transactions, and for failing to disclose the connection to the Standstill Agreement. Boesky pleaded guilty as charged to the criminal conspiracy charged in April, 1987. Included in the government's statement to the District Judge at the plea hearing, with which Boesky affirmatively agreed, was the charge that Boesky had been instructed by his co-conspirator to buy over 10% of the stock outstanding and was expected to file a 13D accordingly. The Information also asserted that arrangements were made for the Posner Group ultimately to buy Boesky's accumulation of stock through the London Stock Exchange after hours in an over-the-counter transaction at a price more than 20% above that prevailing in the American market, in a disguised attempt to make Boesky nearly whole on his costs.

 Drexel was charged with felony on the Fischbach transactions in an Information referring to the Standstill Agreement and stating that Milken had caused Boesky to acquire more than 10% of the Fischbach stock for the benefit of the Posner Group, with the purpose to break the standstill arrangement, and have a 13D filed without disclosure of the guarantee against loss (the parking arrangement). Drexel pleaded guilty as charged to the six Count criminal Information. The government charged that Drexel was also accumulating Fischbach stock while working on a financing of the Posner Group and that its actions were with the purpose to aid in breaking the Standstill Agreement and enabling the Posner Group to acquire control of the company; and that Drexel through Milken had secretly reimbursed Boesky for his losses.

 The authorized representative appearing at the Plea proceedings for Drexel, stated to the District Judge on its behalf that "based on the information available to it, Drexel is in no position to dispute the government charges".

 Michael Milken was charged in six Counts with felonies, to all of which he pleaded guilty as charged in April 1990, as a co-conspirator and as an aider and abettor in unlawful Fischbach transactions undertaken for the undisclosed economic benefit of "Milken, Drexel and its customers". The Information charged that Milken had induced his co-conspirator Boesky to purchase and hold more than 10% of outstanding Fischbach stock with the assurance that Drexel would make up any losses, if any; that on or about July 9, 1984, the Boesky Organization bought in excess of 3% of Fischbach stock from Drexel (which it had been accumulating), thereby increasing Boesky's holding to more than 13% and on July 10, 1984, Boesky filed an amended Schedule 13D which fraudulently concealed Drexel's interest in Boesky's purchases; that the purpose was to evade regulatory requirements and to fraudulently conceal the true situation with respect to the Boesky 13D filings.

 Milken told the District Judge in the plea hearing in referring to the arrangement he had made with Boesky that, "I do not remember what I told him six years ago, but I indicated to him that he would not lose money" . . . "I assured him that Drexel would make good on his losses. These assurances were not recorded in the books of Drexel and I did not expect that they would be reflected in any Schedule 13D's filed by the Boesky Organization and in fact they were not". . . . Milken further stated: "The Boesky Organization began buying Fischbach securities and eventually bought over 10% of Fischbach including securities that had been owned by Drexel. Over the next months, he called me incessantly to complain that the price of the stock was dropping, that Drexel was responsible for his losses, that my comments to him were guarantees against loss, and that he expected us to make good. Thus, I assisted in the failure to file an accurate 13D. This was wrong and I accept responsibility for it. This is the basis for Count II, and is one of the overt acts in Count I". Milken also admitted that "in order to make up these losses, I caused Drexel to execute certain bond trades which resulted in profits to the Boesky organization".

 The Proof At Trial

 The trial before the Court fleshed out the Fischbach transactions in more detail through the testimony of Boesky and Milken, supplemented by testimony at trial and by depositions of others. It turned into a swearing contest on the Posner connection with Boesky credibly laying the facts bare and Milken carefully tip-toeing semantically and evasively away from revealing the Posner connection with and their responsibility for the Fischbach illegalities. Only so much of the evidence need here be reviewed separately from the accompanying Supplemental Findings of Fact.

 Briefly, Boesky's testimony was that Milken telephoned to him suggesting the purchase and parking of 10% of Fischbach stock and that he would be stopped out and made whole by the Posner group if the stock were to go down. Milken also told Boesky that if he should want any direct conversation with the Posners, that he would arrange to have Steven Posner call Boesky. That same afternoon, within a matter of hours, Steven phoned and talked to Boesky and guardedly acknowledged his awareness that Boesky was to buy the stock saying basically "don't worry about it." Boesky testified that he believed it was very reasonable for him to assume that he was speaking for the Posner Group. He added, "Steven was a known entity among the Wall Streeters." Steven Posner was the senior executive and vice chairman in New York in charge of the Posner companies. Boesky thereafter had additional conversations with Steven Posner. They talked about when it was reasonable to assume that Boesky would be able to sell the position accumulated and the general response was "not to be concerned." There were several conversations between the two during the course of the holding about the persistently declining market price of the stock, and in response to Boesky's statement "Gee, it's down quite a bit", Steven would say "Don't worry about it". Ultimately, Boesky communicated to Steven that he would like it to be done by a time certain; he mentioned March, 1985. Boesky wanted to dean up the transaction by then if possible. Steven Posner never denied or repudiated his connection with the transactions nor in any way suggested that it was not the Posners' problem.

 Milken's testimony on direct examination was that he did not "recall" telling Victor or Steven Posner of his assurances to Boesky. He denied any agreement, understanding or arrangement with Victor or Steven Posner about his assurances; he denied arranging the telephone call by Steven to Boesky; "not that I recall", he also said.

 On cross-examination, Milken admitted that Drexel served as banker for the Posners and had ultimately financed in a private placement the purchase of the Boesky block by Penn Engineering, the Posner entity; but he denied that the Posners were co-obligors to Boesky with him.

 On the issue of Milken's credibility, Milken also testified as follows: He did not remember "exactly" what he told Boesky but admitted "initiating" the conversations with him; he did not encourage Boesky to buy a "specific" amount of Fischbach, although the criminal Information to which he pleaded guilty said that he unlawfully induced the Boesky Organization to buy and hold more than 10%; he did admit guaranteeing Boesky for his losses; he claimed that he first assured Boesky against loss at the time when Boesky's losses totaled $ 6.5 million because of the sharp drop in the market price; that Drexel would make good because of "the future relationship we hoped to have with his firm" was his alleged reason; he denied any participation as testified by Boesky, in fixing the nominal $ 45 price for Boesky's sale to PEC; he denied he originated or participated in the idea of going to the over-the counter market in London to do the trade, and claimed he does not know why it was done there; in short he contradicted most of Boesky's testimony to the contrary. He admitted that the day after the Posners paid $ 45 a share, Drexel sold them 85,000 shares of Fischbach at $ 39 a share through the New York Stock Exchange; and he admitted that Drexel took a $ 3 million fee for "investment banking" services from PEC, that was paid from the private placement to finance the purchase of Boesky's block of stock and to pay off a bank loan to PEC.

 Milken's denials, lapses of recollection and responses were unworthy of belief, contradictory and internally inconsistent. His demeanor evidence and sparring with the examiner and the Court belied their credibility.

 Herbert C. Griffin, a witness by deposition, had left a bank connection to join the Posner controlled companies where he served from 1979 until August 1986, laterally in the capacity of executive vice-president. He described Steven Posner's role as in charge of the New York office and as Milken's main contact at the Posner affiliated companies; and that Steven conducted the senior level relations responsibilities of the office.

 Griffin testified that during the fall of 1984 Milken was in conversation on a speaker-phone with Steven while Griffin was present in the office and that Milken told Steven that Victor Posner intended to buy Fischbach stock from Boesky, to which Steven replied, "We don't have the money to do it and we want to do it, so you guys have to raise the money for us to do that, if that's what we're going to do". Steven, according to Griffin was in favor of purchasing the stock from Boesky.

 After the deal with Boesky was closed, Griffin told Steven that in his opinion, the price paid to Boesky for the block was too high, to which without explanation, Steven responded that "he thought it was appropriate".

 Donald Glazer, a defendants' witness at the trial and by deposition, had joined the Posner companies in 1984 to do work on the needed financing for PEC to purchase Fischbach stock. In December 1984, he met with Alan Brumberger of Drexel in this connection. Initially he canvassed the suggestion of a financing that would allow Posners to make a tender offer for any and all of the stock up to 100% of the amount outstanding. Early on, however Glazer was told that this was not feasible and that Drexel would not be able to do that degree of financing for the Posners at that time and suggested that the Posners do just the Boesky block for the time being.

 When Glazer relayed this information to Victor Posner he was told that Victor wanted a commitment by Drexel to go beyond the Boesky purchase in the financing plans. Victor wanted an assurance from Drexel that the latter would get financing to acquire up to 80% of Fischbach. A suggestion was explored that this goal could be reached in three separate financings: the first would be basically to buy the Boesky stock; the second would be to get the Posner ownership up to over 50%; and the third would be to get the remainder up to a minimum of 80%.

 Glazer suggested that Victor himself should speak to Milken, that this might help. The next day, in Glazer's presence, Victor phoned Milken directly and spoke to him about this. Milken expressed a willingness to make the effort in three steps, but pressed Victor to close the pending Boesky purchase. When Victor got off the phone, he told Glazer to go ahead and buy the Boesky stock and that he would rely on Milken to do later financings up to 50% and then 80%.

 In Glazer's testimony by deposition it appeared that during the week of the closing with Boesky, Posner's lawyer, Sy Hertz, discussed with Steve Freiden, Boesky's lawyer, the price to be paid to Boesky. Freiden took the position that they were not going to negotiate on price; the amount to be paid was what it would take to make Boesky whole, namely, cost to Boesky plus cost to carry the stock. Negotiations for a price, according to Glazer went on for a week but price was not resolved by counsel. Glazer testified that the final decision regarding the financing, the price set for the trade in London for the Boesky stock and Drexel's $ 3 million fee were made by Victor Posner. Although Glazer said, "I knew all of the essential details to get to the negotiations, close the transaction", but he professed not to have known at the time what price was agreed and paid, or to remember what the differential was between Boesky's cost, the market at the time and the price paid, or how many shares were involved in the block purchased, or why the transaction was shifted to the London market to be closed there. He did recall with some prodding that the New York market price was $ 38, 39 or 40. This blurred recollection on the part of the man most intimately involved was remarkable, to say the least, is not worthy of belief and is not credited.

 In sum, Steven Posner was known to have been in, from the start, on the deal arranged by Milken with Boesky. From the start, Victor kept a close watch through his house counsel on its development and surfaced to give his sanction for the closing of it in all pertinent aspects. Boesky's testimony substantially gave the credible version of the parking job he undertook.

  The issues of credibility are resolved in favor of the plaintiff and against the defendants. There is enough affirmative proof from the witnesses, the documents, the corroborating circumstances and the probabilities on which to draw the reasonable inferences and conclusions in favor of the plaintiff that surmount the pallid semantic and almost ludicrous denials and contrived explanations of the defendants' witnesses.

 Additional

 The accompanying Supplemental Findings of Fact and Conclusions of Law collate the essential matters in respect of the issues and findings of fact set forth herein and sufficiently deal with the remaining issues decided by the Court in this case without need for a further explanation by an opinion thereon.

 SO ORDERED

 New York, New York

 December 1, 1993

 Milton Pollack

 Senior United States District Judge

19931201

© 1992-2004 VersusLaw Inc.



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