Michael Milken, who single-handedly dominated the huge market in risky junk bonds and earned billions of dollars in the 1980s, today was ordered to serve a stiff 10-year prison term for securities fraud.
Milken, who sobbed at points during the sentencing, stood with his head down as U.S. District Judge Kimba Wood pronounced the stiffest punishment yet in the fraud scandals that have gripped Wall Street since the mid-1980s.
In addition, she sentenced him to three years probation during which he must work 1,800 hours a year in community service.
Milken, 44, had faced a maximum of 28 years, but Wood's sentence is far stiffer than many had predicted. He must serve at least one-third of his prison term before he can be considered for release.
"I believe that a prison term is required for the purposes of general deterrence," Wood told a court crammed with 200 spectators, including many of Milken's friends and supporters.
Wood said Milken's misuse of his leadership position constituted "serious crimes warranting serious punishment and the discomfort of being removed from society."
She said that Milken is a man of "talent and industry" but that a long prison term was required to send a message to other possible securities-law violators.
The judge said that in handing down the sentence she considered evidence of additional crimes, including obstruction of justice by Milken.
He was ordered to begin his sentence March 4, 1991. No federal prison was designated.
The sentence capped the long and tumultuous saga of the former Drexel Burnham Lambert Inc. executive who was first implicated in an aggressive government insider trading investigation by speculator Ivan Boesky in 1986.
Milken, of Encino, Calif., personally made more than $1 billion through a junk bond empire that altered American corporate finance in the 1980s and helped others to buy and mince up America's largest corporations.
Sobbing at times during the 90-minute hearing, he told the judge: "What I did violated not just the law but all of my principles and values and I will regret it for the rest of my life. I am truly sorry."
Before Wood issued the sentence, Milken's attorney, Arthur Liman, asked her to consider the financier's more than $360 million in charitable contributions and other acts of generosity.
Assistant U.S. Atty. Jess Fardella countered that "despite his talents and opportunities, Mr. Milken sought to multiply his success through the vehicle of fraud."
Milken pleaded guilty in April to six counts of conspiracy and fraud related to illegal securities trading after denying a much broader array of accusations.
None of the charges involved insider trading or junk bonds, the risky debt securities Milken turned into a tool for capital raising and corporate takeovers.
As part of his plea bargain, Milken also agreed to pay $600 million in fines and restitution to defrauded investors, the largest penalty against an individual in U.S. history.
Boesky, by comparison, was sentenced to three years in prison and penalized $100 million after pleading guilty to one criminal count of lying to federal regulators. He served 18 months in prison.