Supreme Court Clears Way for Trial of Milken

The Supreme Court today cleared the way for a civil fraud trial of Beverly Hills junk bond specialist Michael Milken and the $650-million settlement of similar charges against his former employer, Drexel Burnham Lambert Inc.

The court, without comment, rejected Milken’s appeal to disqualify the federal judge presiding over the cases.

Milken, his brother, Lowell, and a former colleague, Pamela Monzert, sought to have U.S. District Judge Milton Pollack in New York City removed from their case.

They said Pollack has an apparent conflict of interest because his wife is receiving $30 million from the sale of a corporation in which Drexel helped set up the financing.

The acquisition of the corporation owned by Mrs. Pollack is unrelated to the financial dealings that landed Drexel and Milken in trouble with the government.

Pollack refused to disqualify himself from the Drexel-Milken cases, and the U.S. 2nd Circuit Court of Appeals last year said the judge acted properly.

Settlement Delayed

The challenge to the judge’s role in the case has delayed settlement of a lawsuit by the Securities and Exchange Commission against Drexel filed last September.

The 2nd Circuit court has refused to assign the case to a different judge but barred Pollack from approving the settlement until the Supreme Court acted on Milken’s appeal.

Settlement of the SEC’s civil suit against Drexel is needed before Drexel can formally plead guilty to six felonies and pay $300 million to the government and $350 million to investors victimized by alleged insider trading in a plea bargain agreement with the Manhattan U.S. attorney’s office.

Drexel originally tried to get Pollack to disqualify himself from the SEC suit but later dropped its objections.

Michael and Lowell Milken have also been indicted on racketeering and securities law charges in a separate criminal case related to the civil suit.