MILKEN INDICTMENT / The Lawyers : Hinckley Attorney, North’s Interrogator Head Milken Defense

He faces racketeering charges. His firm has already agreed to plead guilty to six criminal counts and is under pressure to fire him. Some of his most trusted former co-workers have become prosecution witnesses. It is no secret that Michael Milken is in serious trouble.

In the face of all this, the “junk bond” wizard of Beverly Hills is staking his hopes--and his freedom--on two of the best defense lawyers on the East Coast. One is Arthur L. Liman, the man who, as chief counsel to the Senate Iran-Contra committee in 1987, gained national attention for his televised grilling of Oliver North.

The other is Vincent Fuller, a lawyer for the Washington law firm of Williams & Connolly, who against formidable odds won acquittal with an insanity defense for John Hinckley Jr., the man who shot President Reagan in 1981.

The charges against Milken--all of which he denies--carry stiff penalties and may allow prosecutors to freeze a big portion of his personal assets, estimated to be worth nearly $1 billion.

Despite the high-powered, high-priced legal talent on the defense side and his assertion of innocence, the serious criminal charges mean a tough battle is ahead in his quest to be cleared. One hope is that there will be a profound mismatch of legal talent between the defense and the prosecution. The two assistant U.S. attorneys trying the case are relatively young, and their main experience before the Drexel investigation was in drug cases.

For his part, Fuller, 57, doesn’t think that the prosecutors’ lack of experience in complicated white-collar criminal cases will make any difference. “They’re very bright, hard-working kids,” he said. “They’re not baby lawyers. They’ve been at this for a while.”

Fuller also foresees no impact on the case from the resignation of Rudolph W. Giuliani, the U.S. attorney in Manhattan. Giuliani, a zealous foe of corruption on Wall Street, was responsible for the surge in criminal prosecutions of securities cases in recent years.

Fuller is probably best known for his defense of Hinckley. He is an extremely tenacious lawyer who for some time remained in the shadow of his famous senior partner, Edward Bennett Williams. For years, Williams was regarded as the dean of Washington’s criminal defense bar.

Strong on Cross-Examination

While working with Williams, Fuller contributed significantly to victories in cases involving former Teamster leader Jimmy Hoffa and former New York Congressman Adam Clayton Powell. Williams was originally retained to be one of Milken’s two lead defense lawyers, but when he died of cancer last August, Fuller took his place.

On his own, Fuller in 1985 also won acquittal of boxing promoter Don King on tax evasion charges. Peter Fleming Jr., who served as Drexel’s lead criminal defense lawyer and who also has a considerable reputation, speaks almost reverentially of Fuller. In an interview, Fleming asserted: “Vince just doesn’t lose.”

Liman, 58, brings to the Milken defense team his own reputation as a criminal defense lawyer, as well as considerable knowledge of Wall Street wheeling and dealing. He helped Warner Communications fend off a hostile takeover attempt by Rupert Murdoch, and he played a role during Ronald O. Perelman’s takeover of Revlon.

Liman, a former federal prosecutor, is with the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison. He is strong on cross-examination, as his sharp interrogation of Oliver North showed. Liman also won a $72-million civil judgment for New York City, which he represented in a lawsuit over defective subway cars, and more recently he played a role in Pennzoil winning major damages from Texaco in the dispute over the acquisition of Getty Oil.

In recent months, Liman, as lead criminal defense lawyer for GAF Corp., twice staved off convictions by obtaining mistrials in the stock market manipulation case against the company and its vice chairman. But a third trial is expected. The most recent trial ended with a hung jury. The earlier one was scuttled because of an error by the 32-year-old prosecutor trying the case. He failed to turn over to the defense an expert witness’s report that a piece of evidence may have been tampered with.

The presence on Milken’s team of two formidable defense lawyers from two prominent firms raises questions about how the work will be divided. For now, no one is saying whether either lawyer will be designated the lead trial lawyer or which will get to conduct the cross-examination of the man expected to be the government’s star witness, former stock speculator Ivan F. Boesky. Fuller flatly refused to discuss the division of labor with Liman. Liman didn’t respond to repeated requests for an interview.

‘Can Smell Fraud’

The two assistant U.S. attorneys designated to try the case are John Carroll and Jess Fardella, both in their 30s. Carroll, who has been practicing law for just over five years, all with the U.S. Attorney’s Office, says most of his experience has been in narcotics-related cases. He joined the U.S. attorney’s securities fraud unit in March, 1987, and acknowledges that switching from drug cases to more complex securities fraud has required some boning up. “It’s a new, substantive body of law to learn, and that represents a big adjustment,” he said.

But he notes that three lawyers from the Securities and Exchange Commission have been assigned to the U.S. Attorney’s Office to assist in the case. He says he isn’t intimidated by the array of legal talent for the defense. Carroll notes that he tried and won cases against top-flight criminal defense lawyers in big-money narcotics trials. And he says that regardless of the legal talent on either side of a case, the facts should be enough to persuade a jury to convict. “I think a lay person can smell fraud,” he said.

Milken’s personal defense is expected to cost, easily, in the millions of dollars. But none of the attorneys or people close to Milken were willing to supply any estimate of the actual cost. In addition to Fuller and Liman, about half a dozen lawyers in each are working on the case.

The lawyers for the other two defendants in the case also include some prominent names.

- Michael F. Armstrong, a criminal defense lawyer representing Lowell Milken, Michael Milken’s brother. Armstrong is a former chief of the U.S. attorney’s securities fraud division. Now a strong critic of Giuliani’s use of criminal laws to prosecute Wall Street figures, Armstrong served on the screening committee set up by Sen. Alfonse D’Amato (R-N.Y.) to nominate a successor to Giuliani. The nomination of New York lawyer Otto Obermaier is pending.

- Gerald B. Lefcourt, who represents Bruce Newberg, a former Drexel trader. Lefcourt was noted for representing several leftist fugitives and activists, including Abbie Hoffman, before turning to more mainstream criminal defense work.

Despite the array of high-powered talent for the defense, Fleming scoffs at the idea that Milken and his co-defendants might start out at an advantage. Despite the legal tenets of presumption of innocence and the requirement that the government provide proof beyond a reasonable doubt, he maintains that in practice all criminal defendants start at a disadvantage before juries. “They are not presumed to be innocent,” he said.