TIME: Almanac 1993/TIME Almanac 1993.iso/time/050790/0507207.000

Text File | 1992-08-28 | 3.5 KB | 75 lines

                `                                                              BUSINESS, Page 87

Fallen Master of the Universe


The junk-bond king pleads guilty, but he's getting off light


    "I transgressed certain of the laws and regulations that
govern our industry. I was wrong in doing so and knew at the
time, and I am pleading guilty to these offenses." With those
contrite but carefully crafted words, deposed junk-bond king
Michael Milken, 43, began a tearful confession before a federal
judge in Manhattan last week. The man whose deals revolutionized
Wall Street and convulsed corporate America read a 15-min.
statement detailing his role in securities fraud that involved
recently paroled speculator Ivan Boesky and investment banker
Dennis Levine. "My plea is an acceptance of personal
responsibility for my own failings and actions," the once
defiant Milken said in closing, weeping audibly. "I am truly
sorry."

    The settlement raised an issue that will be debated for
years to come: Is Milken getting off light? Of 98 counts
originally filed against him, the financier pleaded guilty to
just six, including conspiracy and mail fraud. He will pay fines
of $600 million, the most ever assessed against an individual,
and he faces a potential 28 years behind bars. But in the
settlement, prosecutors dropped their most serious charges,
including insider trading and racketeering, which carried a
potential prison sentence of more than 500 years. Moreover, with
a personal fortune estimated to be in excess of $1 billion,
Milken is likely to retain a sizable nest egg. "Justice wasn't
served," declares Albert Sindlinger, who runs a stock
market-research firm catering to small investors. "Considering
all the damage he did to stockholders, taxpayers and the
public's confidence in the stock market, Milken is getting off
easy."

    The most regrettable aspect is the lack of a trial. While
the settlement will save the Government the cost of a lengthy
proceeding, the deal will deprive the public of a chance to hear
all the evidence in the largest white-collar case in U.S.
history. "This is like the Nixon pardon," charges Michael
Harkins, a New York City money manager. "We needed this case to
go to trial because the charges against Milken went to the heart
of our financial system."

    Milken's cadre of supporters, however, think he has suffered
enough. Melvin Brosterman, a Manhattan securities lawyer,
contends that nothing will be gained by sending Milken to jail.
"Prison would be superfluous. For the last four years [of the
federal probe], Michael Milken has been serving a sentence,
being hounded and living under a cloud. I'd give him credit for
time served." Milken's attorney, Arthur Liman, is expected to
plead for leniency on the ground that his client made an
"enormous" contribution to the U.S. economy by using junk bonds
to help finance hundreds of companies and create thousands of
jobs.

    Milken's sentencing is delayed until Oct. 1, in part to
allow the court to deliberate on the prison term. But that will
not be the end of his legal problems. Milken has already been
hit by a dozen class-action civil suits filed by investors who
claim they lost money as a result of his wrongdoing. The
Securities and Exchange Commission is setting up a fund for
investor claims, using $400 million of Milken's fine. When that
money runs out, investors will be free to try to collect
directly from Milken, a process that is likely to dog him for
years to come.


By Thomas McCarroll/New York.