Milken May Give Testimony for 1st Time at Friend’s Trial

Former junk bond financier Michael Milken is likely to testify publicly for the first time soon, as a prosecution witness in the criminal trial of a longtime friend and business associate, according to court documents released Friday.

Milken’s lawyers and federal prosecutors confirmed that he is on the witness list to testify against Alan E. Rosenthal, an Encino resident who once headed the convertible bond department in Drexel Burnham Lambert’s junk bond headquarters in Beverly Hills. Rosenthal’s trial on charges of conspiracy and securities fraud is due to begin May 18 in New York.

The disclosure was made in documents relating to Milken’s continuing effort to win a reduction in his current 10-year prison sentence. Prosecutors said in the court papers that they still oppose a reduction. If his sentence stands, Milken won’t be released on parole before June, 1994.

Throughout his massive legal problems--which included a guilty plea to charges of securities fraud, settlement of Securities and Exchange Commission civil charges and the recent settlement of scores of civil suits against him--Milken has never testified in open court.

Milken’s efforts to get his sentence reduced hinge on persuading U.S. District Judge Kimba M. Wood that he is cooperating fully with the government and helping prosecutors bring other cases. The judge isn’t likely to rule on the sentence reduction request until after the Rosenthal trial.

Milken’s public debut as a witness may come in the case against one of his most loyal supporters. In the 1970s, Rosenthal was an employee in a men’s clothing store and a neighbor of Milken’s in New Jersey when Milken offered him a job at Drexel. When Milken moved Drexel’s high-risk, high-yield bond operations to California, Rosenthal came too. The Milkens and Rosenthal’s family have homes near each other in Encino.

During the government’s long investigation of Milken, it successfully pressured many of his top associates into giving evidence against him, granting several of them immunity from prosecution. But Rosenthal refused. Since Milken pleaded guilty in 1990, Rosenthal is the only former Drexel employee against whom the government has filed criminal charges.

A spokeswoman for Milken declined to comment on whether the testimony he would give is likely to be damaging to Rosenthal. “We can’t go beyond what’s in the documents,” she said. Rosenthal’s lawyer, Steven Kimelman, couldn’t be reached immediately for comment.

Milken first filed papers last October seeking a sentence reduction. Since then, his lawyers and prosecutors have disagreed over how helpful Milken has been. Prosecutors stated again in the papers released Friday that “Mr. Milken’s cooperation has not led to the prosecution of other individuals and institutions. Nor has Mr. Milken’s cooperation resulted in the filing of any SEC enforcement actions to date.”

Milken’s lawyers argue that he has given useful information in government investigations. They also argued that he should be given credit for agreeing to settle the civil suits. Lawyers said the settlement removed a huge burden from the courts.

The papers noted that Milken has devoted his time to furthering the education of other inmates in the minimum security federal prison camp in Pleasanton where he is housed, including running a program to help inmates pass high school equivalency tests and establishing a camp library. As part of these efforts, Milken has organized a Scrabble tournament for inmates, the documents state.