Comments Crack Up Milken Hearing

Prosecutors may not have done much new damage this week to Michael Milken, but one of his own defense witnesses unexpectedly dented the Milken legend Tuesday by disparaging the junk bond wizard’s prowess as a trader.

As pre-sentencing hearings droned on, Assistant U.S. Atty. John Carroll appeared startled by an answer he got from defense witness Joseph W. Harch, a former managing director of Drexel Burnham Lambert’s corporate finance department.

Carroll: “Mr. Harch, is it correct to say that you have a very high regard for Mr. Milken’s skills as a trader?” Harch: “As a trader? No.”

This prompted an eruption of laughter.

Harch then indicated that he thought Milken’s strengths lay more in his exceptional salesmanship than in actual trading of securities.

Harch didn’t elaborate on his opinion of Milken’s trading ability. The hearings are being held so that U.S. District Judge Kimba M. Wood can decide if there is evidence of additional crimes beyond the six to which Milken has pleaded guilty. They are due to resume Thursday.

The brief colloquy elicited Milken’s first public laugh since the hearings started last week. A Milken spokesman declined to comment on Harch’s assessment.