In the first public test of prosecutors' evidence against Michael Milken, three gov- ernment witnesses failed to link the junk-bond financier definitively to a key stock manipulation charge.
At a special hearing on unproven allegations against Milken, former Drexel Burnham Lambert Inc. trader, Peter Gardiner claimed Monday his ex-boss "without a doubt" manipulated Wickes Cos. stock in April 1986 - but he offered no direct evidence.Testifying with immunity, Gardiner also said he was told Milken had authorized an order that Drexel workers throw out documents after learning Ivan Boesky was cooperating with the government's fraud probe that November.
But Gardiner and two other government witnesses failed to state directly that Milken told Boesky - or ordered someone to tell Boesky - to buy large blocks of Wickes in an illegal bid to drive up the price, as the government has charged.
Milken, 44, pleaded guilty in April to six counts of conspiracy and fraud.
The hearing is to give U.S. District Judge Kimba Wood more information about Milken's professional character before sentencing him. The ex-head of Drexel's Beverly Hills, Calif., junk-bond division faces up to 28 years in prison.
The hearing is the first time the government's voluminous case against Milken has been aired in a courtroom.
Wood said it was unclear from Gardiner's testimony that Milken directly ordered a manipulation. She said Milken's statements, as quoted by Gardiner, were "fairly ambiguous."
The hearing was to continue Wednesday. The government is to present evidence on two other alleged illegal transactions.