Redemption still eludes Milken
In the 16 years since his release from prison, disgraced junk-bond king Michael Milken has beaten prostate cancer, raised hundreds of millions of dollars for medical research and reshaped an image tarnished by a 1990 conviction for securities fraud.
One thing he’s been unable to do is win a presidential pardon, despite the support of some of the country’s most influential people.
Before he left office Jan. 20, President Bush declined to grant Milken’s pardon application, just as President Clinton had eight years earlier.
One of those disappointed by Bush’s decision was outgoing Food and Drug Administration Commissioner Andrew von Eschenbach, who said Milken’s philanthropy had transformed medical research, raised awareness of prostate cancer and saved lives.
“Forgiveness is something that’s an important part of our culture,” Von Eschenbach said. “Here’s a man who is really serving society.”
To push his latest bid for a pardon, Milken retained Theodore B. Olson last summer. Olson, a partner in law firm Gibson, Dunn & Crutcher’s Washington, D.C., office, served as solicitor general under Bush and was his lawyer in the Supreme Court case that stopped the Florida recount, assuring his 2000 election.
In the final months of Bush’s term, “many prominent people from a wide range of fields in business, government, education and medical research” wrote letters supporting a pardon, Milken spokesman Geoffrey Moore said in an e-mail to The Times.
Support for Milken’s pardon was not universal, however, with resistance from some within the Justice Department and some on Wall Street.
Bill Seidman, former chairman of the Federal Deposit Insurance Corp. and Resolution Trust Corp., said it would be a mistake to minimize the economic damage that Milken wrought in the 1980s.
Milken’s junk bonds became favored holdings of some huge savings and loans that later failed, causing some to blame him for that crisis. It’s a charge Milken and his supporters have denied.
“If you add it all up, he cost the government more money than any person in the S&L; debacle,” said Seidman, now CNBC’s chief commentator and publisher of Bank Director magazine.
“The crimes for which he was convicted were one thing. But the cost to the government of his operations in the S&L; industry was hundreds of millions of dollars.”
Although Seidman said he didn’t campaign against the pardon, he said he wasn’t convinced that philanthropy alone should win clemency for Milken, whose net worth is estimated at $2.5 billion.
“He’s spent a huge amount of money to improve his reputation. I’m not sure that’s the basis upon which a pardon should be given,” Seidman said.
The 62-year-old Milken, who was raised in Encino, is the finance legend who built the modern junk bond market in the 1980s while at Drexel Burnham Lambert -- only to have the government indict him on racketeering, insider trading and securities fraud charges in 1989.
His star-crossed career began in 1970 when he joined the then little-known Drexel investment bank on Wall Street and began to research and trade junk bonds.
Milken believed that the long-term reward in owning such high-yielding, low-quality securities far outweighed the risks.
That would be the basis of the empire he would build -- first in buying junk securities for himself and for investor clients, then in underwriting the issuance of the bonds for entrepreneurs and corporate raiders who were unable to easily raise capital from conventional sources such as banks.
By the mid-1980s, Milken, now relocated to Beverly Hills, was financing a new generation of entrepreneurs, including William G. McGowan of upstart long-distance firm MCI and Las Vegas casino visionary Steve Wynn.
But his power mushroomed when he became the investment banker to corporate raiders who saw major U.S. companies as bloated and thus vulnerable to attack. That fueled widespread enmity against Milken in corporate America -- and allegations that he was corrupting financial markets.
The $550 million he personally earned from his junk-bond empire in 1987 also made him a natural target for politicians railing against Wall Street greed.
But it wasn’t until 1989 that Rudy Giuliani, then the U.S. attorney in Manhattan, persuaded a grand jury to indict Milken on 89 charges, including racketeering, insider trading and securities fraud.
In April 1990 Milken, with his business in a shambles after his indictment, pleaded guilty to six lesser charges that mostly involved violations of securities-disclosure rules.
He was sentenced to 10 years in prison and served 22 months.
After his release, Milken was diagnosed with prostate cancer. He received the grim news after insisting that his doctor test him for the disease because a friend had recently died from it.
Diet and exercise became a new priority for Milken, who recovered from the disease and started a foundation that has raised more than $350 million for cancer research. He has also donated millions more for scholarship and education programs, and launched the Santa Monica-based Milken Institute, an economic think tank.
In 2000, Milken made a push for a pardon from Clinton. Among those who supported his effort was a surprising name: Giuliani. A prostate cancer survivor, Giuliani said he appreciated the work that Milken had done to search for a cure.
But Clinton chose not to grant the pardon. A former administration official told The Times that Clinton made his decision in large part because of opposition from law enforcement, the Securities and Exchange Commission and the U.S. attorney in New York.
This time around, as Bush reviewed the cases of dozens of clemency candidates before leaving office, many people considered Milken to have a reasonably good shot.
“You could find very few people in America who for the last 15 years have been more philanthropic or lived their life with more integrity than Michael Milken,” said Leo Hindery, the former president of AT&T; Broadband who now heads investment firm InterMedia Partners.
A few months ago, Von Eschenbach, a Bush appointee, wrote the Justice Department to recommend Milken’s pardon. A former director of the National Cancer Institute, Von Eschenbach said it was his own idea to write the letter, based on Milken’s support for prostate cancer research.
By publicly discussing his battle with prostate cancer, Milken helped encourage men to be tested so victims could be treated early, cancer experts said.
George Wilding, director of the University of Wisconsin Comprehensive Cancer Center, said deaths from prostate cancer have decreased significantly since Milken brought attention and funding to fighting the disease.
“His foundation very quickly drew many outstanding scientists who were not thinking about prostate cancer to start thinking about it,” Wilding said.
Bush offered no explanation for his decision to deny Milken’s pardon, but Harvard law professor Alan M. Dershowitz said he had a good idea.
“Very simple. It’s two words: Marc Rich,” Dershowitz said, speaking of the fugitive financier whose pardon by outgoing President Clinton sparked a federal probe. “The Marc Rich pardon made it very difficult for Bush to pardon anybody who is perceived to be wealthy.”
Dershowitz said Milken’s philanthropy had made him deserving of a pardon, and he asserted that Milken’s financial wisdom could help the nation recover from the current banking crisis.
Moore, Milken’s spokesman, would not say whether Milken intended to reapply for a pardon from President Obama.
“He never looks back,” Moore said. “He’s a person who tries to think positively and always be productive. He’s focused on the many challenges ahead -- accelerating medical solutions, reforming education, contributing creative ideas for economic recovery.”