Michael Milken was described by friends Thursday as stunned by the scope of the allegations against him and the government’s intent to try to take virtually his entire fortune.
“I think his basic mood is one of shock and dismay that a country in which he has made such an enormous contribution would treat him this way,” said Robert K. Lifton, co-chairman of a New York-based apparel company, the Marcade Group, who talked to Milken. “He has been feeling this way for some time. But like everything else, when it finally happens, it has more meaning than when it is pending.”
Milken had been under intense scrutiny by the government and press for nearly 2 1/2 years, and he had already been named a defendant in a wide-ranging securities fraud suit filed by the Securities and Exchange Commission. Stories about his impending indictment appeared with regularity in many publications.
But when the other shoe finally dropped Wednesday and a federal grand jury charged Milken with 98 counts of racketeering and securities fraud, there was apparently no sense that the worst was behind him.
“I don’t think you will find any relief in that indictment,” said Dr. Neal Kassell, a neurosurgeon at the University of Virginia in Charlottesville and a longtime personal friend of Milken.
If there was no relief, friends said there appeared to be no weakening of Milken’s resolve, either.
“You find the reaction is surprisingly calm and one of ‘now we have to work together and solve this problem,’ ” said Kassell, who spoke with Milken by telephone Thursday morning.
Often, respected businessmen accused of highly public crimes find longtime friends suddenly shunning them. But throughout the government’s long investigation, Milken has retained the loyalty of many friends and business associates. Some are people who got rich with his financial assistance; others are friends and admirers.
“There are a lot of people of substance, not only financial substance, who are certainly supporting him in any way that he needs,” Kassell said. “We are talking about love and friendship and all of the things that are essential in making the difference between success and failure in a situation of crisis.”
A large group of those friends and business associates raised several thousand dollars to express support for Milken in full-page advertisements today in major newspapers, including the Los Angeles Times.
Under a headline “Mike Milken, We believe in you,” the ad carries a brief text praising Milken as a visionary businessman. The list of 90 sponsors includes chief executives from many firms that expanded and profited with Milken’s assistance.
The effort was organized in anticipation of the indictment by Selig Zises, chairman of Integrated Resources, an investment firm in New York, according to several people on the list.
For the past several weeks, Milken’s lawyers and public relations advisers have criticized the anticipated use of the racketeering law by the government against Milken. They have argued that the statute was intended for use against organized crime figures and more traditional criminals, not securities violators.
The government indeed invoked the statute and said it will use the forfeiture provisions of the law to try to seize more than $1 billion of Milken’s assets, including all of his salary and bonuses from Drexel Burnham Lambert since 1984, the New York-based investment house from which he took a leave of absence Wednesday.
Milken has declined public comment, issuing only a four-paragraph statement Wednesday in which he promised to fight the charges in court and thanked his supporters. But people who spoke with him said he was particularly angered by the scope of the racketeering charges.
The sense that using the racketeering statute was inappropriate also was a central complaint from many of his friends and associates.
“It is as if you work all your life and you amass some money and you do something and you make a quarter on it and the government says it is going to take all of the money you ever made,” said Lifton of the Marcade Group.
Charles F. Sarkis, chairman of a Boston restaurant and real estate company called the Westwood Group, expressed similar outrage.
“Is this a mass murderer? Is this a serial killer?” Sarkis asked. “I think it is terrible overkill, and I think the indictment shows the government is willing to say the end justifies any means.”
Government lawyers and some legal experts have defended the use of the racketeering law and its forfeiture provisions in white-collar crimes. On Wednesday, Manhattan U.S. Atty. Benito Romano said the huge amount the government is seeking to take from Milken represents “the extraordinary levels of compensation” that he received as a result of his allegedly illegal activities.