Clinton Weighs a Milken Pardon Amid a Tug of War

On one side, a powerful, immensely rich man with important friends and a history of good deeds. On the other side, an egregious case of securities fraud and a high-profile federal indictment.

These are the contending forces weighing on President Clinton’s mind as he decides whether to grant a pardon for financier Michael Milken.

The Securities and Exchange Commission and the Justice Department strongly oppose a pardon for the 54-year-old Encino mogul, who pleaded guilty to six felonies involving securities fraud. In an ordinary case involving an ordinary lawbreaker, that opposition would be enough to squash any idea of a pardon.

But Milken, a prostate cancer survivor who is worth $750 million, has raised and donated millions of dollars to fight the disease--and contributed millions more for other causes. He also funds a think tank and has a network of influential friends.

These friends are heavyweights in the business world, big donors to political candidates and causes and skilled fund-raisers who can get the personal attention of the president of the United States.

All the enthusiasm for a Milken pardon comes from outside the Clinton administration, knowledgeable sources indicated Tuesday. No one with any significant job in the administration is pushing for the pardon. In fact, all the impetus from within the administration is in the other direction, with determined opposition from the SEC.

“This is very, very controversial,” said an administration source who asked not to be identified. But the pardon is still a live prospect because “there are a lot of people on the outside who are interested in the idea,” the source said.

Pondering the appeals from Milken supporters, Clinton must make some delicate judgments, said another administration source watching as the president tries to make up his mind. The impressive and extensive record Milken has compiled in the world of education and philanthropy are working in his favor, the source said. “You have to admit that Milken has done a lot of good things,” the source said.

Indeed, the president has heard a litany of testimonials from Milken’s backers about his charitable endeavors. Some of these supporters also happen to be important financial backers for the Democratic Party.

But the president, ever mindful of his legacy, also is worrying about the criticism that would erupt if he grants the pardon, one of the administration sources noted. Clinton risks the criticism that he is offering special treatment to Milken because the financier is rich and influential.

“It’s impossible to predict with any confidence whether he’s going to do it,” said an administration source. “It’s just up to him to make the call one way or another. This is very difficult.”

There is no formal campaign for a Milken pardon, his spokesman, Geoffrey Miller, said Tuesday. “We have been contacted by hundreds of people asking if they could help, if they could write the president, but we have discouraged any kind of campaign,” Miller said. “It’s simply false to say there is an aggressive lobbying campaign.”

But he acknowledged that some people who have contacted the White House have shared their letters with Milken’s office. He declined to name them.

While Milken’s friends are powerful advocates, there are other members of the business community who oppose the pardon. Some on Wall Street worry that Milken, armed with a pardon, might try to become actively involved again in the securities business, a source in the business community said Tuesday.

In the end, the decision comes down to Clinton alone in the Oval Office, considering the political pros and cons and deciding whether the potential benefits--for him and the Democratic Party--would outweigh the expected outburst of bad publicity a pardon might bring.

Milken himself is not a big donor to either political party. But his network of friends and acquaintances--fellow alumni of the now-defunct Drexel Burnham Lambert investment banking firm, corporate moguls whose fortunes he helped build and figures in the world of medicine and philanthropy--is at the nexus of power in American life. They can help with any issue or cause the president may want to pursue after he leaves office. And they can help current and future Democratic officeholders.

Clinton has discussed a pardon for Milken with administration lawyers, but has not made a final decision. He leaves office on Saturday.

Milken gained fame as the virtual creator of the widespread market for high-interest speculative bonds, called “junk bonds,” which helped fuel a wave of takeovers and mergers during the 1980s. He dominated the market, putting together the companies that issued the bonds with the banks and institutions that bought them.

He was indicted on numerous federal charges--accused, in effect, of using his power to manipulate the junk bond market. He pleaded guilty in 1990 in federal court to six felonies. These included concealing stock positions illegally, helping clients evade income taxes and a conspiracy involving secret record-keeping to disguise improper trades. He served 22 months in a federal prison camp.

Milken is determined to clear his name, and the pardon would amount to recognition that his reputation has been restored as a useful citizen, according to those close to the financier. For someone who has served time and completed his sentence, a pardon is the government’s official forgiveness of the crime.

One of Milken’s close friends, supermarket magnate Ron Burkle, also is a good friend of Clinton. When the president visits Los Angeles, he often stays at Burkle’s estate. And Burkle reportedly is one of the Milken associates who wants to see him pardoned.