Sides See Milken ‘Cooperation’ Differently : * Securities: The ex-junk bond king’s lawyers say he should get a reduced sentence for the 150 hours of information he has provided prosecutors. The government says it is unusable.

Lawyers for imprisoned junk bond king Michael Milken asserted that the fallen financial titan has earned the right to a reduced sentence by cooperating with the government, but prosecutors dismissed much of the information gleaned as unusable.

They described a large part of the information Milken divulged during more than 150 hours of debriefing sessions as “stale” and useless for bringing new indictments. They also said, “We do not believe that Mr. Milken has completely disclosed all wrongdoing of which he is aware.”

The court documents disclosed for the first time, however, that Milken has shared at least some new information about criminal activity. Prosecutors from the U.S. attorney’s office in Manhattan acknowledged that information from Milken has led to “one substantial, ongoing criminal investigation.”

Government lawyers said Milken wasn’t involved in the incident, and they added that they probably won’t be able to obtain an indictment. Prosecutors refused to provide details. Sections of court papers spelling out what Milken has told the government remained sealed.

Milken, 45, who ran Drexel Burnham Lambert’s junk bond department in Beverly Hills, was sentenced last November to 10 years in prison on the six felony counts to which he pleaded guilty. He also agreed to pay $600 million in fines and penalties.

A condition of his guilty plea was that he cooperate fully with the government after his sentencing. U.S. District Judge Kimba M. Wood, who imposed the sentence, said at the time that she would consider reducing it later, based on how well Milken cooperated.

Milken is in a minimum security federal prison camp in Pleasanton, Calif. The judge had recommended that he be required to serve 36 to 40 months of the sentence before parole. But the Parole Commission in August determined that federal guidelines require that he serve 44 months, meaning that he would not be released until the end of October, 1994.

Wood has given no indication of whether she will order the sentence reduced.

Papers filed by Milken’s lawyers say that during his first months in prison he was assigned to work as an orderly, cleaning toilets, mopping floors and emptying wastebaskets. A prison progress report called him “an excellent employee” who isn’t afraid of menial labor. More recently, he was allowed to tutor inmates seeking high school equivalency diplomas in math and other subjects.

Milken, renowned for starting work each day well before dawn, apparently is keeping similar hours in prison. Documents made public Thursday included a handwritten letter by a fellow prisoner, lauding Milken’s efforts. The inmate said Milken is so committed to tutoring that “he will even wake people up at 5:00 a.m. to achieve their goals, at risk of life and limb.”

Both sides stated in the court documents that much of the information Milken turned over to the government deals with insights into securities industry trade practices. Prosecutors said that information might be useful to securities regulators or legislators but wouldn’t lead to new criminal cases.

Government lawyers also said that Milken for the first time admitted “a single new episode where he was personally involved in unlawful conduct.” But they said in the documents that the incident occurred over five years ago, too long under the statute of limitations to lead to a criminal case against the individuals involved. Details remained sealed while the judge reviews a request by lawyers for several news organizations to make them public.

The government said it was unlikely that Milken’s information would lead to new criminal cases.

“The prospect for such prosecutions is limited, inasmuch as Mr. Milken has largely denied any additional personal wrongdoing and has also largely denied any direct knowledge of criminal acts by others,” prosecutors stated.

Milken’s lawyers, however, asserted that Milken had met the requirement of truthfully telling prosecutors all he knew about illegal activities. They argued that he shouldn’t be penalized if the information doesn’t lead to convictions.

“Our criminal justice process does not operate on a bounty system,” they argued.

The lawyers also noted that a number of other defendants who were convicted in trials resulting from related investigations have recently had their convictions overturned by a federal appeals court.

‘A Mature, Intelligent and Congenial Inmate’

A Federal Bureau of Prisons “progress report” on former junk bond king Michael Milken was made public Thursday with court papers in which his lawyers ask that his prison sentence be reduced. The report, written by David R. Satka, senior case manager, and also signed by R. K. Myers, camp unit manager at the minimum security federal prison camp in Pleasanton, is dated April 26, 1991. The following are excerpts:

* Program plan: Mr. Milken was initially classified on March 20, 1991, at FPC (federal prison camp), Pleasanton. . . . He was programmed to receive Correctional Counseling, attend voluntary groups and work as an orderly. Mr. Milken indicated he would be spending his leisure time walking, jogging, reading, tutoring and receiving family visits.

* Work assignments: Mr. Milken was initially assigned to work as a camp orderly. . . . Work supervisors state that Mr. Milken is an excellent employee that (sic) is not afraid of menial labor.

* Educational/vocational participation: Before becoming incarcerated, Mr. Milken obtained a Master’s degree in Business Administration. Mr. Milken has expressed an interest in taking Spanish, law and criminology college courses. Additionally, Mr. Milken has volunteered to teach a math course to his fellow inmates.

* Relationships with staff: Mr. Milken maintains an excellent rapport with both peers and staff. He is seen as a mature, intelligent and congenial inmate, who has made an excellent adjustment to his incarceration.

* Incident reports: Mr. Milken has maintained clear institutional conduct since the start of his incarceration.