Calling former junk-bond magnate Michael Milken a victim of prosecutorial overreach and "class envy run amok," a Newport Beach money manager has asked President Trump to pardon the former L.A. financier.
In a letter sent to Trump this week, David Bahnsen argued that Milken did not commit any crime worthy of prosecution or prison time and that history has been kinder to junk bonds — now a staple of corporate finance — than to the man who pioneered their use.
A pardon would "accompany the vindication that history has provided Mr. Milken's innovations in the capital markets with a vindication from the highest office in the land," the letter stated.
Bahnsen wrote that he decided to send his letter in part because Trump's pardon of former Maricopa County Sheriff Joe Arpaio "has provoked a resurgence of thought around Presidential pardons" — and because after reading numerous books about Milken he simply believes it is the right thing to do.
"There's nothing in it for me," Bahnsen told The Times in an interview. "I believe it was a gigantic case of injustice against him personally."
Bahnsen, principal of the Bahnsen Group, which services institutions and wealthy individuals, said he has never met and has no connection to Milken. Geoffrey Moore, Milken's spokesman, said he knew nothing about Bahnsen's letter.
In the 1980s, Milken turned investment bank Drexel Burnham Lambert into a powerhouse by trading and later underwriting bonds for risky companies.
Those bonds — dubbed "junk" because of their risk but also "high-yield" because of their high interest rates — became a favored tool of corporate raiders, providing them with the capital they needed to take over huge corporations.
In the process, Milken, an Encino native, turned Los Angeles into the center of the junk bond world when he moved Drexel's high-yield bond practice to Century City and later Beverly Hills.
In 1989, federal prosecutors led by then-U.S. Atty. Rudolph W. Giuliani brought 98 felony charges against Milken, including racketeering, insider trading and securities fraud.
The following year, Milken pleaded guilty, but only to six minor counts related to securities reporting violations. The plea, part of a deal that also ended a federal case against Milken's brother and colleague, Lowell, led to a lifetime ban from the securities industry and a 10-year prison sentence. Milken served 22 months.
For years, financiers and Milken supporters have argued the junk-bond pioneer was targeted by prosecutors because of his immense success — he reportedly earned $550 million in 1987 alone — and because Drexel Burnham Lambert was, at the time, a symbol of Wall Street greed. They also say Milken only pleaded guilty to spare his brother.
Opponents of past efforts to get a pardon, including a former chairman of the Federal Deposit Insurance Corp., argue Milken's crimes go far beyond those he was charged with or convicted of and that the junk bonds he peddled helped spark the savings and loan crisis — a claim Milken has long denied.
Milken is not actively pursuing a presidential pardon, according to sources close to him, though he applied for one during the Clinton and George W. Bush administrations. He was denied both times and has not applied since.
Bahnsen is not the first person to push for a pardon for Milken, who was diagnosed with prostate cancer more than two decades ago and has long been in remission.
The former financier founded the Milken Institute, a Santa Monica think tank, and has funded education, economic, public policy and cancer research.
His work has earned him some unlikely allies, including his former prosecutor, Giuliani — also a prostate cancer survivor — who told the Wall Street Journal in 2000 he supported a pardon for Milken in large part because of his philanthropic activities.
In defending Milken and the junk bond market, Bahnsen noted that Tesla recently raised $1.5 billion to fund production of its more affordable Model 3 — by selling junk bonds.
"It's an ironic climax to 40 years of controversy over high-yield debt," Bahnsen said. "You have this socially responsible, environmentally friendly company raising money by using an instrument that would not exist if not for the innovation of Michael Milken."