Former stock speculator Ivan F. Boesky's sentencing on criminal fraud charges was postponed yesterday until Oct. 9.
The postponement, which was expected, is a result of Boesky's continuing cooperation with federal investigators who are supervising criminal and civil probes of Wall Street corruption. If those probes lead to formal charges, Boesky is expected to be an important government witness.
"Any delay is the result of a careful judgment made by prosecutors and Boesky's counsel and reflects, in part, the ongoing government investigation," said Harvey Pitt, Boesky's lawyer.
Boesky's sentencing had been scheduled for next week. He faces a maximum of five years in prison and a $250,000 fine for conspiracy to make false statements to the Securities and Exchange Commission in connection with his stock trading.
Last November, Boesky paid the SEC $100 million to settle civil charges that he traded stocks on the basis of confidential information about upcoming takeovers. His cooperation with federal investigators has led to guilty pleas by former merger specialist Martin A. Siegel and brokerage executive Boyd L. Jefferies.
The former stock speculator also has provided the SEC and the Manhattan U.S. attorney with evidence about alleged wrongdoing by Drexel Burnham Lambert Inc. executive Michael Milken, who heads the investment banking firm's influential junk bond operations in Beverly Hills, Calif.
It is not unusual for the sentencing of cooperating witnesses in a government investigation to be postponed until the information they provide yields formal charges or a trial. Prosecutors can then make sentencing recommendations based on a full account of the defendant's cooperation.
Martin Siegel, though implicated by Boesky, is himself a cooperating witness in a continuing grand jury investigation of alleged insider stock trading by executives at two major Wall Street firms, Goldman, Sachs & Co. and Kidder, Peabody & Co. Siegel's sentencing, after being postponed several times, is now indefinitely delayed.
Manhattan U.S. Attorney Rudolph W. Giuliani, whose office is overseeing grand jury investigations stemming from Boesky's cooperation, has said that the full extent of Boesky's criminal activities and his cooperation with federal investigators will be disclosed at the time of his sentencing. Giuliani's office had no comment yesterday on the reasons behind the postponement.
There could be additional delays in Boesky's sentencing beyond Oct. 9 if the government has not completed its investigation of Milken and Drexel. If the government files charges, sources have said Boesky would be a key witness in any proceedings. Sources have said the government investigation of Drexel is unlikely to be completed by October.
While postponements may later make it possible for federal prosecutors to make a full recommendation to Judge Morris Lasker about Boesky's sentence, the delay does appear to leave the former speculator in an uncomfortable state of limbo.
"The experience of this entire process is one that really can't be understood by anyone not involved in it," Pitt said. "It is a very painful and difficult process. There is always a desire to confront one's difficulties and move forward from there and make a constructive new beginning.