Milken’s Lawyers Said to Be in Talks on Plea Bargain
A long-expected new indictment of former Drexel Burnham Lambert Inc. junk bond chief Michael Milken has been delayed again, this time because Milken’s lawyers have held talks with federal prosecutors on a possible plea agreement, sources close to the case said Tuesday.
But the sources cautioned that such contact is fairly “routine” at this stage in a criminal case. They said there wasn’t any indication that the two sides would reach an agreement or that they were even close to one. The prosecutors, meanwhile, have informed all of the individuals who may be named as defendants in the new indictment that it still could be filed within days, the sources said.
Milken, 43, was named last March in a 98-count federal indictment in New York. It accused him of violating the federal racketeering law through a pattern of securities fraud and stock market manipulation while he headed Drexel’s junk bond operations in Beverly Hills. His brother, Lowell, and former Drexel trader Bruce L. Newberg also were named in the indictment. All have pleaded not guilty and said they will vigorously fight the charges.
Prosecutors have said publicly for months that a “superseding” indictment will be filed in the case. The new indictment, originally expected last fall, is to contain many additional charges and name more defendants. Sources have said the new charges will include additional counts of insider trading, relating to trading in securities of Caesars World Inc. and Tiger International Inc. Milken is also expected to be charged with using highly valuable warrants and other securities to pay off some customers personally in exchange for having their firms buy junk bonds of doubtful value.
Milken’s lawyers had also held talks with the government shortly before the original indictment was returned last year about a possible settlement. But those talks led nowhere.
One source said of the contacts within the past two weeks by Milken’s lawyers and federal prosecutors that “they’re negotiating to cut a deal.” He said the lawyers have attempted to work out a possible accord, which would then be presented to Milken. But, the source said, no tentative deal has been reached, and if one is hammered out, “I don’t think anyone knows, including Milken, if he’s going to take it.”
Ken Lerer, a spokesman for Milken, said: “We have not commented in the past and we are not going to start commenting now on the unfair press leaks that have accompanied this case and that are designed to deny Mike Milken a fair trial.” He added: “Rather than printing the rumor of the day, everyone would be better served by waiting for the facts.”
Jess Fardella, an assistant U.S. attorney on the case, refused to answer questions about possible talks. He said: “I have no comment on any aspect of the case.”
Milken’s lead defense lawyer is Arthur L. Liman, who gained national attention as chief counsel for the Senate in the televised Iran/Contra hearings in 1987. Martin Flumenbaum, an attorney in Liman’s office, promised to return a reporter’s phone call on Tuesday but didn’t call back.
Another source involved in the case also said “discussions are going on” between Liman’s firm and the U.S. Attorney’s Office in Manhattan. People involved in the case note that, in recent months, a long list of former Milken co-workers and clients have become cooperating witnesses for the government. Several of them were among Milken’s closest associates, including Gary Winnick, the former head of Drexel’s convertible bond department, who later headed an investment partnership in which Milken held a large interest.
Lawyers involved in the case, as well as defense lawyers who aren’t, have said the long list of government witnesses could make it extremely difficult for Milken to win an acquittal. Milken and his lawyers have long maintained that he didn’t violate any laws.
It wasn’t clear under what conditions, if any, Milken might find a plea agreement acceptable. The charges contained in the indictment already filed carry potential penalties of many years in prison and forfeiture of assets totaling $1.85 billion.
The superseding indictment has been repeatedly postponed, at one point because Liman was involved in a trial in another case. Government lawyers had informed defense lawyers that the new indictment would be returned last week, and then had named specific days. But each time the filing was delayed. Prosecutors told defense lawyers Monday that the indictment still may be filed within several days.
Frederick P. Hafetz, a lawyer representing Newberg, refused to answer any questions about the activities of Milken’s lawyers. But referring to Newberg’s defense team, he said: “We are not having any discussions with the government.” He added: “We’re awaiting the superseding indictment, and we expect to go to trial.”
Michael Armstrong, the lawyer for Lowell Milken, said: “As a matter of policy I am not commenting on anything.”
