Levine, Dennis (1952–)

INVESTMENT BANKER Dennis Levine's rise from working-class Queens (New York City) boy to multimillionaire seemed to justify the 1980s ethos of greed—until he was arrested for insider trading. On May 12, 1986, Levine fled Department of Justice (DOJ) officials who were waiting outside his office at Drexel Burnham Lambert.

In his autobiography, Levine remembers himself as an innocent young banker tempted into insider trading by colleague Robert Wilkis in his first job at Citibank. Investigative reporter Douglas Frantz argues that it was Levine who introduced Wilkis to insider trading after Levine had moved to Smith Barney and Wilkis to Lazard Frères. Levine envisioned creating a ring of sources at major investment houses, all pooling confidential information to make profitable trades ahead of the market. Meanwhile, his first secret overseas trading account was prospering.

Late in 1984, Drexel Burnham Lambert, home of junk bond manipulator Michael Milken, hired Levine as a managing director, intending to make him a mergers-and-acquisitions star. Invited in his first week to participate in Coastal Corporation's $2 billion acquisition of American Natural Resources (ANR), Levine turned his inside information into a $1.4 million personal profit. Levine blamed arbitrageurs such as Ivan Boesky for the heavy trading in ANR stock that forced Coastal to pay more for ANR. It was Levine who fed Boesky the inside information about ANR. Soon the two had a formal arrangement in which Boesky paid Levine for tips.

When an anonymous letter from Venezuela told brokerage Merrill Lynch that two of its people in Caracas were trading on insider information, the trail led first to Lynch broker Brian Campbell, then to Levine's $10 million secret trading account at Bank Leu in the Bahamas. After Levine surrendered to the DOJ, he turned in Boesky and the remainder of his insider trading ring, starting a long-running insider trading scandal. At his February 1987 sentencing for perjury, securities fraud, and tax evasion, the judge lauded Levine's “extraordinary” cooperation in leading investigators to “a nest of vipers.” Levine was sentenced to two years in prison and a $362,000 fine.

Levine emerged briefly from prison in June 1987 to testify before a closed Congressional hearing on insider trading. Commented Representative Gerry Sikorski (D-MN): “It was not a story that engendered compassion. It was more akin to the curiosity one feels when one turns over a rock in a brook and looks to see what's underneath.” In December 1988, Drexel settled with the DOJ for six felony counts and $650 million in fines, all related to employees implicated in Levine's ring. (Unrelated charges against Milken were not included.) Drexel went bankrupt and closed. After his release from prison, Levine became president of ADASAR Group, a financial consulting firm.