Prosecutors to Meet With Milken Dec. 18 in Hopes of Learning More on Dealings

Former junk bond king Michael Milken, obliged under his plea agreement to begin cooperating with the government, is to have his first debriefing session with federal prosecutors Dec. 18 in New York, sources close to the case said Thursday.

Prosecutors are known to be interested in talking to Milken on a variety of subjects. Among them is what Milken knows about wrongdoing by savings and loan executives and by other former big clients of Drexel Burnham Lambert, as well as information on certain of his former Drexel co-workers.

Milken, 44, was sentenced Nov. 21 to 10 years in prison on the six felony charges he pleaded guilty to in April. His plea agreement specified that he would cooperate fully with federal investigators after his sentencing. He is to begin the prison term March 4.

Milken’s spokesman declined to comment Thursday on the schedule for meeting with prosecutors. Assistant U.S. Atty. Jess Fardella, one of the lead prosecutors in the case, also declined to comment.

The sources said, however, that the initial debriefing session is expected to last at least two weeks. After that, the prosecutors are to meet with staff members of the House oversight and investigations subcommittee, which has subpoenaed Milken to testify.

Michael F. Barrett Jr., chief counsel for the subcommittee, said prosecutors had asked that the subcommittee hold off calling Milken in for public hearings until the U.S. Attorney’s Office had completed the initial debriefing. Barrett said prosecutors may ask the subcommittee to refrain from questioning Milken about certain subjects on which criminal cases may be brought.

It is far from clear how enthusiastic Milken will be in cooperating. One indication that he may be less than eager, however, is that his lawyers have notified the subcommittee that he will refuse to be interviewed by staff members in advance of hearings. Barrett said that admitted inside trader Ivan F. Boesky had submitted willingly to staff interviews. He said the staff wanted to interview Milken first “because that way you can run down a lot of dead ends and you don’t need to waste the (subcommittee) members’ time.”

Even if Milken knows of criminal wrongdoing by former clients or colleagues, prosecutors may have a difficult time making cases. The statute of limitations for crimes such as securities fraud and mail fraud is five years. Nearly all of the wrongdoing Milken was under investigation for took place before November, 1986, when it became known publicly that Boesky was cooperating with the government.

Separately, the federal judge who sentenced Milken said in a hearing that she still hadn’t made a formal determination that could heavily influence how much of the 10-year sentence Milken will serve. U.S. District Judge Kimba M. Wood asked for more information from lawyers before deciding whether she will tell the probation department that Milken’s crimes cost victims more or less than $1 million.

Under federal parole guidelines, which aren’t mandatory, the federal Parole Commission most likely would require Milken to serve from 40 to 52 months in prison if he cost victims more than $1 million. If their loss was less, he ordinarily would be required to serve from 24 to 36 months. Government lawyers said Milken’s admitted crimes involved more than $4.7 million in fraud, while the defense placed the total at a maximum of $693,000.