Milken Aide Given Immunity, Forced to Testify

Times Staff Writer

One of the top “junk bond” salesmen in Drexel Burnham Lambert’s Beverly Hills office was granted immunity and testified recently in New York before a federal grand jury investigating Drexel and its junk bond chief, Michael Milken.

The salesman, James Dahl, a close aide to Milken, was served with a court order that required him to testify and granted him immunity from prosecution for anything he said, according to his lawyer, Peter M. Fishbein. The lawyer said Dahl hadn’t volunteered to cooperate with the government but was forced to testify by the so-called compulsion order.

The U.S. attorney’s office in Manhattan has been conducting a criminal investigation of several Drexel employees for securities law violations, and indictments are expected within the next several weeks. Drexel and Milken also are defendants in a Securities and Exchange Commission lawsuit charging the firm and several individuals with insider trading and manipulating stock prices.


Because of Dahl’s close professional involvement with Milken, sources close to the case speculated that his testimony could be very helpful to the government. But neither Fishbein nor the U.S. attorney’s office would comment Wednesday on the nature of his testimony.

As reported, Dahl was among four Drexel employees who last month received “target letters” from the U.S. attorney’s office telling them that they were likely to be indicted in the case. But Fishbein said that because of the immunity, he was now confident that Dahl won’t be indicted. The others who received target letters are Milken; his brother, Lowell J. Milken, and Cary Maultasch, a Drexel trader. Bruce Newberg, a former Drexel trader, also received a target letter.

Fishbein said the U.S. attorney’s office obtained the compulsion order because otherwise Dahl would have invoked his Fifth Amendment rights against self-incrimination and refused to testify. As a result of the order, “his choice was to testify or go to jail, so he testified,” Fishbein said.

‘Still Employed’

The lawyer said Dahl is back at his Drexel job in Beverly Hills, carrying out the same duties as he had before. When asked if Dahl remains on good terms with Milken, Fishbein said: “I don’t really know what his terms are with Mike Milken, but he’s certainly still employed and working at Drexel.”

In a prepared statement, Dahl said he testified because he was ordered to do so by the court and that, now that he no longer faces the possibility of criminal prosecution, “I look forward to devoting my full attention once again to my family and my work at Drexel.”

Dahl had been named in a lawsuit filed by Staley Continental Corp. two years ago against Drexel. The suit accused Dahl and Drexel of threatening the company with a hostile takeover unless Staley hired Drexel as its investment bank. Dahl and Drexel denied the charges, however, and the suit was settled in August after Drexel agreed to buy a Staley commodities unit.