Milken May Get $100-Million Pay for 1988

Federal prosecutors are considering whether to reverse course and allow Drexel Burnham Lambert Inc. to pay Michael R. Milken more than $100 million for work he did last year, sources said today.

The provision barring Drexel from paying its indicted former junk bond trader his 1988 compensation was included in the investment firm’s formal settlement of criminal securities fraud charges with the government.

The withholding has been controversial because Milken has not been charged with any wrongdoing in 1988. Milken has challenged the provision in U.S. District Court in Manhattan.

Sources familiar with the case, who asked not to be named, said prosecutors have not made a final decision on whether to pay Milken his compensation, estimated at more than $100 million.

But they indicated that a reversal may be made because legal experts have criticized the provision as potentially unconstitutional and that the government may not want to start its case against Milken off on the wrong foot.

They said that ending the lengthy delay in Drexel’s plea in the case was not a factor in reconsidering the payment provision.

Drexel, Assistant U.S. Atty. John Carroll and a Milken spokesman all declined comment.