Heat Builds Over UC Deal With Milken : Education: Senator sends a blistering letter to the university president about the system’s agreement to split profits with the ex-junk bond king on UCLA lecture tapes. A comic strip fuels the controversy.

A state senator has accused the University of California of “sleaze, greed and self-promotion” because of its formal agreement to split fallen junk bond king Michael Milken’s profits from the videotape sales of his management school lectures now under way at UCLA.

In a blistering letter Friday to UC President Jack Peltason, Sen. Patrick Johnston (D-Stockton) criticized the university for giving Milken “respectability and acceptance” as a guest lecturer and called on the school to balance the former corporate raider’s presentations with the full explanation of his crimes.

Johnston also lambasted the university for entering into a joint copyright agreement with Milken, who served nearly two years in a federal prison after pleading guilty to felony stock manipulation in 1990. UC has allowed Milken’s new Education Entertainment Network to tape the lecture series and will get a share of the profits if the firm can sell the sessions, as planned.

“The University of California should not be engaged in profiteering from tapes on ‘pop’ economics presented by a convicted felon,” wrote Johnston, chairman of the Senate Insurance Committee.

Milken made his debut as a guest lecturer this fall in a master’s degree class about corporate finance at UCLA’s Anderson School of Management. Although his academic coming-out has been a source of continuing publicity and controversy, it came under increased fire last week when it was featured as the subject of the “Doonesbury” comic strip.

In one of the strips, Doonesbury creator Garry Trudeau shows Milken leading his class in a chant of “Greed Works! Crime Pays! Everybody Does It!” In others, Trudeau has Milken comparing himself to “visionaries” such as Galileo and Columbus, and has the class booing a freshman who has the temerity to ask whether “justice was served” by his confinement to a “country club prison.”

Trudeau does not criticize UCLA directly in the comic strips. But on Monday, he excoriated the school in a statement responding to Milken’s invitation to visit the class. Tongue in cheek, Trudeau said he has agreed to stop criticizing Milken “in return for cash and a net position in his videotaped lecture business. . . . “

“However, since the above agreement pertains only to Mr. Milken . . . I am still at liberty to characterize UCLA as shameless and unprincipled for hiring him, and his students as venal little twits,” the statement said. “May they all be hit by buses on their first day at work.”

Lorraine Spurge, a former colleague of Milken at Drexel Burnham Lambert and now director of his educational programming company, said Monday that the Doonesbury strip is far from the image that students are getting from the class. She said Milken has been able to open the world of high-stakes finance to the students by bringing such corporate heavyweights as Steve Wynn, chairman of Mirage Resorts Inc., to speak.

In a recent class, she said, students “had a ball” listening to a taped debate between Milken and Nobel laureate Merton Miller of the University of Chicago on the subject of capital formation.

Added Carol Scott, associate dean of the Anderson School at UCLA: “I understand full well how controversial Mr. Milken is (but) I think it’s our job as an educational institution that it all gets examined.”

Still, there has been fallout. UCLA spokeswomen said Monday that 18 people have written to Chancellor Charles Young complaining about Milken’s role as an unpaid lecturer. They also said seven people, none of them major donors, have either refused to donate to UCLA or vowed to stop giving to the business school because of Milken.

An aide to Johnston said the senator decided to write his letter after learning a couple of weeks ago that UC had entered into the copyright agreement with Milken. The accord, say UCLA and Milken officials, does not require the university to pay any of the estimated $100,000 production costs for the videos but gives it a share of the profits--an amount to be negotiated in the future--as well as control over how the University of California name will be used.

Scott said the university’s primary concern is that the tapes be offered to other colleges and schools at cost, and not for profit. As for other marketing ideas, she said UC has left that to Milken’s new firm.

“When you get involved with Mr. Milken, you’re talking about somebody with enormous resources. He does things very big,” said Scott. “With Mr. Milken, you have this feeling there might be something bigger out there. But who can say?”

Johnston, however, wrote that any agreement from which UC might profit was totally unacceptable.

“Such an arrangement, if allowed to stand, would set a standard for the ‘90s (exceeded) only by those established in the ‘80s by Messrs. (Ivan) Boesky and (Charles L.) Keating for sleaze, greed and self promotion.”

A UC spokesman said Monday that Peltason has yet to see the letter, but that university officials will be responding to Johnston, who is considered one of the Legislature’s experts on insurance and workers’ compensation matters.