The Judgment on Milken
It looks as if Wall Street’s once high-flying junk bond king, Michael R. Milken, is going to prison, a sad but nonetheless appropriate punishment for his role in the biggest scandal ever to hit the securities business.
U.S. District Judge Kimba Wood handed down a stiff 10-year prison sentence that’s a clear and unequivocal signal that white-collar crime is not to be tolerated--or mitigated by acts of philanthropy.
Milken, a financial genius of sorts, revolutionized U.S. finance with his high-risk bonds in the booming 1980s, but he also came to symbolize the excesses of that decade. His sentence is by far the stiffest punishment meted out in the government’s probe into insider trading of stocks.
The 44-year-old Californian had pleaded guilty to six felony counts of violating federal conspiracy, tax and securities laws rather than face trial on racketeering and fraud charges.
Calling him “a man of talent and industry,” Judge Wood said that Milken’s crimes nevertheless merited lengthy incarceration to deter further wrongdoing. “This kind of misuse of your leadership position (constitutes) serious crimes warranting serious punishment and the discomfort of being removed from society.” Milken also must perform 1,800 hours of community service during each of three years’ probation.
Said Securities and Exchange Commission Chairman Richard C. Breeden: “This sentence should send the message that criminal misconduct in our financial markets will not be tolerated, regardless of one’s wealth or power.” Milken’s attorney had asked the judge to consider Milken’s more than $360 million in charitable contributions and other acts of generosity. He had faced a maximum 28 years in prison. He had previously agreed to pay $200 million in fines and place $400 million in a fund to compensate investors. Now, with good behavior, he could be out of jail after 3 1/2 years.
To her credit, Wood displayed perspective and wisdom in her judgment of the man and his crimes. Milken had said he was “truly sorry.” But for what he did, that was just not enough.
