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TIME: Almanac 1990s
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<text id=89TT0011>
<link 90TT2524>
<link 89TT0969>
<title>
Jan. 02, 1989: Disowning A Billion-Dollar Baby
</title>
<history>
TIME--The Weekly Newsmagazine--1989
Jan. 02, 1989 Planet Of The Year:Endangered Earth
</history>
<article>
<source>Time Magazine</source>
<hdr>
BUSINESS, Page 86
Disowning a Billion-Dollar Baby
</hdr><body>
<p> Michael Milken, his wife and three children spent the day
strolling through midtown Manhattan, looking for all the world
like just another clan of holiday shoppers. But for the
workaholic Milken, the idyll ended when he received some
distressing news: the company that stood by him through almost
two years of Government investigations had abruptly decided to
settle its case with prosecutors, effectively cutting him
adrift to fight his own battle. The junk-bond king, 42, who has
created billions of dollars in revenue for Drexel, made hundreds
of millions for himself and ranks as the most influential
financier of the decade, rushed to the offices of his attorneys.
In less than an hour, the group issued a statement: "Michael
Milken is not a party to the Drexel settlement. His attorneys
are continuing to defend him against any charges that might be
brought."
</p>
<p> Within a matter of days or weeks, Milken is expected to be
indicted on criminal charges for many of the same alleged
securities violations described in a civil case that the
Securities and Exchange Commission filed in September. The SEC
accused Milken of, among other offenses, manipulating stock
prices to reap millions of dollars in illicit profits and
defraud his clients. The lawsuit portrayed Milken as a zealous
dealmaker whose disrespect for tradition led him to disregard
the law as well. A suburban Los Angeles native who attended
Wharton Business School, Milken was the pioneer of junk bonds as
a financing technique for midsize companies and later as the
potent fuel for takeovers.
</p>
<p> Now he is out in the cold. Said one of Milken's friends:
"From now on he is on his own -- and as determined to prove his
innocence as ever." Milken's defense against criminal charges
could be hampered by the Drexel settlement, in part because the
firm has promised to cooperate with the U.S. Attorney's probe of
his transactions. But Stanley Arkin, a Manhattan attorney who
specializes in white-collar crime, says separating the cases
could help Milken. Says Arkin: "Milken will now be able to
defend just his actions instead of those of 10,000 others."
</p>
<p> After years of working 15 hours a day, Milken now spends
much of his time preparing his defense. He remains the titular
head of Drexel's operations in Beverly Hills, where the firm's
junk-bond department is based. But Milken will probably take an
indefinite leave of absence as soon as an indictment is handed
up.
</p>
<p> If Milken chooses to fight the criminal charges, he can
afford the legal bills. His net worth is estimated at more than
$500 million. Even so, the man who revolutionized the money
markets of the roaring '80s could wind up doing prison time in
the '90s. Milken could also be slapped with a huge fine or be
banned from working in the securities industry. For one who has
devoted his life to building and controlling an unprecedented
financing empire, that prospect may be the most chilling of all.
</p>
</body></article>
</text>