Junk bond financier Michael Milken probably won't get a chance to face his main accuser, Ivan Boesky, before sentencing. Federal prosecutors said Tuesday they do not plan to call the inside trader to testify against Milken at a pre-sentencing hearing. Assistant U.S. Attorney John Carroll also said the government was dropping one of four alleged illegal transactions against Milken on which it planned to present evidence and testimony at the planned two-week hearing. The move not to include Boesky in the unusual hearing, scheduled to begin Thursday, was not a great surprise. Boesky was the main source of information against Milken but also was susceptible to attack from defense lawyers. Milken has pleaded guilty to six felony counts and has agreed to pay $600 million in penalties in connection with the biggest government probe of Wall Street fraud. He faces up to 28 years in prison when sentenced by U.S. District Judge Kimba Wood. Sentencing was delayed for the hearing into uncharged allegations against Milken raised by the government in its lengthy pre-sentencing memorandum. Wood has said the hearing is designed to shed light on Milken's character. In a telephone conference with the judge and Milken's attorneys, Carroll said the government was unlikely to call Boesky to the witness stand. But they did not rule out the possibility altogether, he said. Carroll also said to save time the government was dropping from its presentation an inside trading allegation involving Milken and Boesky in securities of MGM-UA Entertainment Co. Boesky also was a central player in two of the other transactions being aired - stock manipulation charges in Wickes Cos. securities in 1985 and a web of alleged wrongdoing in the 1985 takeover of Storer Communications Inc. The third alleges insider trading in Caesar's World Inc. securities in 1983. The Caesar's and Storer transactions involve new charges against Milken not contained in the government's original 98-count indictment last year or earlier Securities and Exchange Commission charges. Wood has given each side a total of 20 hours to present eestimony and cross-examine witnesses at the hearing. The burden of proof on the government is lower than at a trial, though. Boesky, who was sentenced to three years in prison and paid $100 million in penalties to settle insider trading charges, is widely reviled on Wall Street and would have given Milken attorney Arthur Liman a broad target to discredit. Boesky was not regarded as a successful witness when he testified earlier this year against former stock speculator John A. Mulheren Jr. Boesky was perceived as combative on the stand and was forced to admit a litany of serious lawbreaking. Instead, Carroll said the government's first three witnesses on the Wickes transaction would be former Boesky head trader Michael Davidoff and former Drexel employees Cary Maultasch and Peter Gardiner, who worked under Milken in Drexel's Beverly Hills, Calif., high-yield bond department. Carroll said the Wickes testimony would be followed by testimony on Storer and then Caesar's. The prosecutor also disclosed that former Drexel trader James Dahl and mutual fund manager Prescott Crocker were among about 10 planned witnesses on the Caesar's deal. The witnesses for the Storer transactions were not disclosed. Prosecutors last week gave defense lawyers a list of 17 possible witnesses and Wood has ordered the government to say in what order it would call them, to help the defense prepare its case. The witness list also includes former Drexel chairman Frederick Joseph. Liman indicated during the conference call that Milken would be present at the hearing in Manhattan federal court.
