P. M. BRIEFING : Milken Pleads Not Guilty to Charges of Racketeering, Securities Fraud

Michael Milken, the man who virtually invented the market in high-yield junk bonds while working at Drexel Burnham Lambert Inc., pleaded not guilty today to a 98-count indictment that charged him with racketeering and securities fraud.

Milken has always denied that he did anything wrong and has retained some of the nation’s most expensive legal talent to defend him in what will very likely be a long and costly trial. His main attorney is Arthur Liman, best known as the government lawyer in the Iran-Contra hearings.

Also charged in the case are Milken’s brother Lowell, a lawyer in Drexel’s Beverly Hills junk bond department who also pleaded not guilty today, and Bruce Newberg, a former Drexel trader who worked for Michael Milken until last year. Newberg already faces criminal charges in a related securities fraud case.

If convicted, Milken and his two co-defendants could be forced to pay up to $1.8 billion collectively in the return of allegedly ill-gotten gains. They also face massive fines of more than $3.7 billion each. Michael Milken faces a staggering prison term of 520 years; Lowell Milken, 95 years, and Newberg, 140 years.