Lawyers hailed the tentative $600-million settlement reached Friday by former junk bond king Michael Milken and federal prosecutors as a major victory for the government, but friends of the fallen financier rushed to his support and called the deal a human tragedy.
"From the government's point of view, any time you convict someone like Milken it's a feather in your cap," said a prominent New York criminal defense lawyer who asked not to be identified.
Added Alan Bromberg, a securities law expert at Southern Methodist University in Dallas: "This tends to prove what the government has said all along, that there is corruption in the securities industry.
"The government," he added, "has wanted to tie this up. It has dragged on for a long time now."
Still, Milken and his defense team were credited with extracting two important concessions: the apparent agreement that he would serve no more than five years in prison, if any time at all, and the dismissal of all charges against his brother, Lowell.
"If he was able to spare his brother from criminal charges, that was clearly something very important to him and that's very admirable," said the New York defense lawyer.
Bromberg speculated that Milken "very much resented the government's indicting Lowell and using it as leverage against Michael. From what I know, Lowell wasn't involved in these transactions."
He criticized prosecutors both for indicting Lowell Milken and for bringing a full 98 charges against Michael Milken, which he described as a "unnecessary bludgeon." Sources said Milken is pleading guilty to six counts.
Bromberg also said Milken appeared to be "trading dollars for years" by agreeing to pay $600 million in penalties.
No one appeared worried, however, about the financial well-being of Milken, who earned more than $1 billion in his job at Drexel Burnham Lambert between 1983 and 1987.
"We won't have to hold a benefit for him," said a Milken friend who remains active in the deal-making community in Los Angeles.
Fred L. Hartley, former chairman of Unocal and an outspoken critic of junk bond financing, reacted to the news of the possible five-year, $600-million penalty with: "Ah, hell. Peanuts."
Supporters of Milken, however, lamented the penalties and cited the financier's contributions to charitable causes.
Said Richard J. Riordan, a lawyer and personal friend of both Milkens who sits on the board of a Milken charitable foundation:
"I feel sorry for Mike and his family. He's a hands-on guy. When he gives his money, he gives his time and effort; he's one of the most quality human beings I've ever met . . . and Mike is no more or less a man today than he was yesterday."
Asked about the possible five-year prison term, Riordan said: "If he goes to prison for a day it would be a waste of incredible talent. Mike has given a lot to the poor kids in our society and has a lot left to give them. This is an incredible mind who can help solve the extremely difficult problems of our society and it should be put to work doing that."
Riordan also said he believes that Milken's legacy to business was positive. "I think that people totally misjudge what his legacy is. He was somebody who gave credit possibilities to companies that had always been denied access to credit. The small and medium companies grew dramatically because of Mike and they were ones who produced the jobs; in the past 10 years, the increase in the job market all came through the lower credit type companies, who all got credit because of what one guy did."
Gershon Kekst, a New York public relations executive who represented companies that relied on Drexel financing during the takeover wars of the mid-1980s, said of the prosecution and settlement: "To me, the whole thing is incomprehensible. It really is, if you ask yourself what's been achieved? What's been learned? It really is an incomprehensible resolution."
Rabbi Marvin Hier, dean of Simon Weisenthal Center in Los Angeles, said he knew Milken through various charitable activities. "In those endeavors he has always been there and he has shown leadership and basically an unusual form of philanthropy. It was broad-based and it cut across many ethnic communities. It's sad to hear he pleaded guilty. I feel bad for him as a person. He gave charity his total effort."
Contributing to this story were Times staff writers Michael Cieply, Alan Citron, Nancy Rivera Brooks and Donna K.H. Walters.