Investment firms feeling other heat

While the inside-trading scandal surrounding disgraced arbitrageur Ivan Boesky has dominated the headlines, a number of other developments have arisen to put the heat on the investment community: In New York last Friday, investment banker Dennis Levine, whose case led to Boesky and other Wall Street notables, was sentenced to two years in prison and fined $362,000 for securities fraud, perjury, and tax evasion.

In Providence, R.I., the office procedures by a branch of the E.F. Hutton & Co. securities firm are under investigation by a federal grand jury. The investigation reportedly involves allegations of money laundering in accounts that may have belonged to organized crime.

In Cincinnati, two founders of a securities firm that collapsed and triggered a financial crisis in Ohio were sentenced to jail. Judge Fred Cartolano last week gave ESM Government Securities founders Ronnie Ewton and George Mead longer sentences than prosecutors had proposed. He called Mr. Ewton ``one of the most cunning criminals I have ever had the misfortune to face.''

ESM, of Fort Lauderdale, Fla., was closed by federal regulators in March 1985. An ESM client, Cincinnati-based Home State Savings Bank, lost $144 million in the closing and collapsed four days later, leading to a crisis in Ohio's privately insured thrifts.

And in Chicago, Staley Continental Inc. last week filed suit against Drexel Burnham Lambert Inc., charging the investment firm with trying to extort Staley's management into supporting a buyout led by Drexel.

Staley is seeking $200 million in damages. It also seeks to prevent Drexel from continuing to acquire Staley stock and from acting in any capacity in any attempted takeover of the company. Drexel, however, described the suit as ``an ill-conceived attempt to capitalize on the current climate'' and said Drexel intends to vigorously contest it.