Milken Denies Allegations at Pre-Sentencing Hearing
Michael Milken’s attorney today denied that the former junk bond king played any role in the 1986 manipulation of Wickes Co. stock, as a climactic hearing began in the government’s four-year insider trading inquiry.
Milken, 44, took copious notes and repeatedly shook his head or rolled his eyes as Assistant U.S. Atty. John K. Carroll laid out the first of three alleged crimes against Milken being aired at the pre-sentencing hearing.
The unusual hearing before U.S. District Judge Kimba Wood will focus on transactions in which the government alleges that the Los Angeles bond dealer broke the law. The claims are separate from six felony counts to which Milken has already pleaded guilty.
Wood said the proceeding is designed to shed light on Milken’s professional character as head of Drexel Burnham Lambert Inc.’s junk bond department. Milken already has agreed to pay $600 million in penalties and faces up to 28 years in prison at sentencing.
Carroll said the three transactions reflected Milken’s business practices, particularly an illegal relationship with admitted inside trader Ivan Boesky, who was Milken’s main accuser.
“It is the context in which these crimes were committed and it was the world in which they lived,” Carroll said in a Manhattan federal courtroom packed with about 100 spectators. “They did not come to this with a clean slate.”
Carroll alleged that Milken directed Boesky’s organization to purchase large blocks of stock in Wickes, a Drexel client, in April, 1986, to push up its price and help the firm retire an issue of preferred shares with costly dividend payments.
“He committed crimes for his client,” Carroll said. “In doing so, he cheated the customers who bought Wickes preferred stock of millions in dividends.”
Lead defense counsel Arthur Liman conceded that Wickes stock had been manipulated but said Milken had nothing to do with it. He said a Milken subordinate, Cary Maultasch, asked Drexel and Boesky to buy Wickes to support its price.
