A former stock trader for Ivan F. Boesky has corroborated Boesky's account of an allegedly illegal trading scheme involving Drexel Burnham Lambert Inc. executive Michael Milken and has been granted immunity from criminal prosecution, sources said yesterday.
David Jachimczyk, who executed stock trades in Boesky's former mid-Manhattan offices, has told investigators that he was aware of the alleged illegal trading arrangement while it was going on and that he maintained extensive records documenting specific trades involved, the sources said.
Sources described Jachimczyk as the most important cooperating witness to emerge so far and said he has supported some of Boesky's charges about the alleged trading arrangement involving Boesky and Milken, who heads the firm's influential junk bond department in Beverly Hills, Calif.
Boesky has told investigators about a trading scheme based on stocks of companies involved in corporate takeovers. Boesky has alleged that he participated with Milken in an illegal "stock parking" arrangement that made it easier for Drexel and its clients to complete takeovers. In a parking scheme, shares in a target company could be purchased by one investor but secretly held by another to conceal the size and other aspects of the first investor's stake from the target company until the takeover bid was announced. Federal securities rules require timely public disclosure of significant purchases of a company's stock.
Investigators have focused on a $5.3 million payment made by Boesky to Milken in March 1986, a payment Boesky has said was meant to reconcile accounts in the alleged trading arrangement. Dozens of takeovers involving Milken and Drexel have been examined by prosecutors as part of their probe of the alleged scheme and other transactions.
Drexel has repeatedly denied any wrongdoing by the firm or any of its employes and a spokesman reiterated that assertion yesterday.
Boesky agreed in November 1986 to settle insider stock trading charges by paying the Securities and Exchange Commission a record $100 million. He also agreed to plead guilty to one felony count carrying a maximum prison term of five years and to cooperate with federal investigators.
Last April, Boesky entered his guilty plea and admitted to conspiring to file false statements with the SEC in connection with the takeover of Fischbach Corp., a New York-based electrical contractor. Sources said that Boesky has told the government that Fischbach was one of the stocks involved in his trading arrangement with Milken.
Jachimczyk traded stocks for Boesky under the supervision of Michael Davidoff, Boesky's chief trader, who earlier this year pleaded guilty to one criminal count of violating securities laws and pledged to cooperate with investigators in their continuing probe of Drexel and others.
Sources said that Davidoff gave Jachimczyk responsibility for executing stock trades involved in the alleged scheme with Milken and that Jachimczyk kept detailed, contemporaneous records of those trades. Those records have been obtained by the government, sources said. Jachimczyk's attorney, Frank H. Wohl of Lankler Siffert & Wohl, declined comment. John Carroll, the assistant U.S. Attorney in Manhattan supervising the Drexel investigation, also declined comment, as did SEC officials.