Milken Testifies on Posners’ Behalf : Courts: They were not told about his secret arrangement with Boesky, the convicted dealer says.

NEW YORK —  Michael Milken returned to federal court Monday and helped two former clients, Victor and Steven Posner, by testifying that he did not inform them of an illegal arrangement with stock speculator Ivan F. Boesky.

Milken, 46, who completed a prison sentence earlier this year, spent nearly 2 1/2 hours on the witness stand in U.S. District Court in Manhattan, recalling his role in the 1984 takeover attempt of Fischbach Corp.

Milken pleaded guilty in 1990 to six felony counts involving securities violations, two of which concerned a secret agreement in which Milken covered Boesky’s losses in Fischbach stock.

Dressed in a dark suit, Milken was stern on the witness stand. He spent much of his testimony trying to cast fine distinctions on the charges to which he pleaded guilty.

Milken occasionally showed a sense of humor. At one point, SEC attorney Barry Goldsmith asked Milken if Steven Posner had first introduced him to Ivan Boesky.

“Back then, everyone was claiming credit for it,” Milken replied, smiling. “Today, no one is claiming credit for it.”

Milken was the last witness in the trial of Victor Posner and his son Steven of Miami Beach. The Posners were charged by the Securities and Exchange Commission with violating securities laws in dealings with Fischbach, a New York electrical contractor, and Burnup & Sims, a cable TV company based in Fort Lauderdale, Fla.

The SEC wants the Posners to forfeit $4 million in salaries they received while at Fischbach, as well as to prevent them from holding positions as directors or officers in any public company.

U.S. District Judge Milton Pollack is hearing the non-jury trial, which began June 17. He is expected to rule after final written arguments are delivered July 14.

A central charge in the case is that Milken encouraged Boesky to buy more than 10% of Fischbach common stock and secretly promised to cover any losses in the investment.

The arrangement allowed the Posners to buy additional shares in Fischbach. Fischbach had restricted the Posners from adding to their 24% share unless an outside investor--in this case, Boesky--acquired more than 10% in the company.

Milken’s firm, now-defunct Drexel Burnham Lambert Inc., also raised money for a company the Posners controlled--Pennsylvania Electric Corp., or PEC--to buy Boesky’s stake in Fischbach.

Milken was asked if he had told the Posners about his agreement to cover Boesky’s losses in Fischbach, which at one point totaled $6.4 million.

“I do not recall having ever told them that,” Milken said under questioning from the Posners’ lawyer, Dennis J. Block.