Settlement May Let Milken Put Off Testifying : Securities: His lawyers feared that depositions might threaten his chances of winning early release from prison.
The tentative settlement of the many lawsuits pending against former junk bond financier Michael Milken may get him out of having to testify soon in depositions in the suits, something his lawyers had hoped to avoid out of fear that it might jeopardize his chances of winning an early release from prison.
As The Times reported Monday, the main parties in civil suits pending against Milken have reached a tentative agreement on a $1.3-billion “global settlement” that would end all of the litigation. About $900 million would come from Milken, with the rest from former associates at Drexel Burnham Lambert who were named in the suits with him.
According to a lawyer involved in the cases, Milken was due to begin depositions as early as next month for suits brought against him by Drexel and the Federal Deposit Insurance Corp. Drexel is suing him, claiming that his illegal activities forced the company into Chapter 11 bankruptcy court proceedings in 1990. The FDIC asserts that junk bond investments sold by Milken contributed to the failure of several savings and loans.
The tentative settlement is likely to delay the depositions and approval would eliminate the need for his testimony. Sources said that if details of additional wrongdoing emerged in the depositions, or if Milken appeared to be covering additional crimes by invoking his Fifth Amendment right against self-incrimination, the federal judge in his criminal case or the U.S. parole board might be influenced against reducing his sentence.
U.S. District Judge Kimba M. Wood is now considering a motion by Milken’s lawyers to reduce the sentence based on claims that he has given federal prosecutors valuable information on other cases. Should she turn him down, his fate would then be in the hands of the parole board.
Ann Brackbill, a spokeswoman for Milken, declined to comment on anything related to the tentative settlement, citing a gag order imposed by U.S. District Judge Milton Pollack, who is presiding over the settlement efforts. .
Sources close to the settlement efforts emphasized Monday that one possible stumbling block may be the court’s ability to prevent new suits against Milken. Pollack is expected to use the protection of bankruptcy law in Drexel’s pending bankruptcy case to issue an order that would block new suits. The ending of virtually all litigation against Milken was a chief incentive for him to agree to the settlement.
But lawyers in the case said Pollack appeared to be venturing into uncharted legal waters. Lawyers said that if the settlement is ultimately approved by Pollack, the parties expect a swift appeal to the 2nd Circuit Court of Appeals in New York in hopes that the appeals court would approve it and give it added authority.
One source said opposition to the settlement has come from lawyers in lawsuits pending in Texas involving Southmark Corp., a real estate conglomerate built with junk bond financing that is in bankruptcy proceedings.
Lawyers in that case are said to want to proceed with their suit. But lawyers involved in those cases, including Dallas attorney Bryan Hurst, couldn’t immediately be reached for comment.
