Newsletter: Michael Milken’s long reinvention

Michael Milken poses with then-real estate developer Donald Trump at the Cap-Cure Pro-Am Invitational Tennis Tournament at the Mar-a-Lago estate, Palm Beach, Florida on Feb. 13, 2000.
(Davidoff Studios Photography/Getty Images)
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Good morning, and welcome to the Essential California newsletter. It’s Wednesday, Feb. 19, and I’m writing from Los Angeles.

On Tuesday, President Trump granted billionaire Michael Milken one of the few things money can’t buy: a presidential pardon.

[Read the story: “Trump grants clemency to 11, including former junk bond king Michael Milken” in the Los Angeles Times]

The former junk bond king spent the better part of the 1980s generating an ungodly sum of money from his X-shaped trading desk in Beverly Hills, and the better part of the ’90s seeking redemption for his financial crimes through high-profile philanthropy.


At the apex of his power, Milken earned $550 million in a single year. That was more than four times the operating budget of the Securities and Exchange Commission — the agency whose far-reaching investigation would soon topple Milken’s position at the top of the financial world, and ultimately land him in a prison cell.

It is difficult to overstate just how high Milken — a poster boy for ’80s-era greed who partially inspired the Gordon Gekko character in the movie “Wall Street” — had soared as he rewrote the rules of corporate finance, or the magnitude of his fall back to earth.

Which brings us to that fall. In March 1989, Milken was indicted on 98 counts of racketeering and securities fraud. The indictment accused him of a prolonged pattern of insider trading, stock market manipulation and defrauding clients.

At the time, this newspaper termed the case to be “the nation’s biggest securities fraud investigation ever,” according to an article that also called Milken “the J.P. Morgan of his generation” and “the most significant and visionary figure in American business in the 1980s,” responsible for unleashing a revolution how businesses raise capital to finance growth. (All of that, by the way, was in a single sentence of the story. There’s plenty more where it came from.)

Milken pleaded guilty to six felonies in 1990 and was sentenced to 10 years in prison. He served a little less than two, and then embarked on one of the great image rehabilitation campaigns of our time.

[See also: “Michael Milken’s pardon follows a decades-long campaign to rehabilitate his image” in the Los Angeles Times]


In fact, if yours is a cultural purview more familiar with the middling 2010 “Wall Street” sequel than the era of the 1987 original, you might be forgiven for knowing Milken only as a prominent L.A. philanthropist, whose name adorns his eponymous institute and its annual global gathering, a local school and a cadre of other charitable endeavors. The once fallen businessman is now firmly ensconced in the conference class of thought leaders and think tanks who preach the gospel of capitalism and operate at the global nexus of business, politics, philanthropy and purchasing carbon offsets for private jet flights.

Here’s a quick look back on Milken’s long quest for redemption. By early 1993, Milken — who was still worth several hundred million dollars — was out of prison and living in a ramshackle Hollywood halfway house. Both the surrounding neighborhood and his reputation were thoroughly un-gentrified, and he had a shared room. But at least his window looked out on the barbed wire-encircled warehouse of a company for which he was once the principal financier.

By 1996, he had survived a serious bout with prostate cancer and was back in the same Encino house that he and his former high school sweetheart purchased in 1978. He was immersed in charity and doing consulting work for a select group of billionaires, but still needed permission from his probation officer to cross state lines to film a “Today” show spot. Most of all, he was trying desperately to “cleanse his blackened reputation” and “shed his image as a late 20th century robber baron,” according to The Times.

[See also: “Milken Redux: Has Cancer, Charity Work Reformed an Ex-Junk Bond King?” in the Los Angeles Times, February 1996]

The curtain truly rose on his second act in 1998, when the Milken Institute held its inaugural global conference. By then, Milken 2.0 had donated millions to cancer research and built a commercial educational empire.

In the conference’s second year, the Economist took a look at the turnout and declared Milken’s social standing to be “fully restored.” The annual event now draws comparisons to Davos.


The late ’90s also marked the Clinton-era beginnings of Milken’s decades-long quest for a presidential pardon, which continued through the Bush administration and into the Trump years.

According to my colleague Laurence Darmiento’s story, proponents of the Milken pardon inside Trump’s circle are said to have included financier and 10-day communications director Anthony Scaramucci; financier Gary Winnick; Jared Kushner, Trump’s son-in-law and senior advisor; Treasury Secretary Steven T. Mnuchin; and Rudolph W. Giuliani, Trump’s outside counsel.

Ironically, Giuliani led the case against Milken in his prosecutor days.

And now, here’s what’s happening across California:

Gov. Gavin Newsom will deliver his annual State of the State address today. California lawmakers will no doubt applaud any promise he makes to zero in on homelessness. But that doesn’t mean they’ll agree with him. The governor may elaborate on a new plan that, he says, will create more accountability by carving the state into still-undecided regions. State officials would then pick an entity in each region to distribute a share of $750 million, bypassing the existing reliance on distributing money directly to cities and counties and other local organizations. The details are vague. Los Angeles Times

Sen. Bernie Sanders has opened a wide lead in California’s Democratic presidential primary, and four rivals are virtually tied for a distant second place, according to a poll released Tuesday. Los Angeles Times


Greeted in L.A. by jeers and cheers, President Trump slams city leaders. Trump landed in the blue state Tuesday for the fourth time in his presidency to meet with organizers of the 2028 Olympic Games before attending a fundraising dinner in Beverly Hills. Los Angeles Times


A brief history of food delivery in Los Angeles: Long before Postmates, Chasen’s would deliver its signature chili to Elizabeth Taylor by plane to Rome, where she was filming “Cleopatra.” Los Angeles Magazine

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Republicans hope Trump’s Bakersfield visit will drive a “red wave” in the Central Valley. Trump will join House Minority Leader Kevin McCarthy in Bakersfield today. Fresno Bee

Meanwhile (and 200 miles north on the 99): “Presidential candidates are giving Modesto and Stanislaus County the kind of attention it rarely receives from them.” Michael R. Bloomberg and Sen. Elizabeth Warren have opened campaign offices there, and Pete Buttigieg recently swung through Turlock. Modesto Bee

Endorsement news in the L.A. D.A.’s race: Sen. Kamala Harris has thrown her support behind George Gascón in his bid to unseat Jackie Lacey as Los Angeles County’s top prosecutor. Los Angeles Times


Rep. Devin Nunes held a major water forum in Tulare County with the Interior Secretary and locked out the Fresno Bee. “I saw you registered for the event today,” a Nunes staffer said in a voicemail to the Bee, “but I want to make it clear that it’s invited press only, and you’re not on the list and your ticket will not scan at the door.” Fresno Bee


Desert Hot Springs residents found a naked burglary suspect in their kitchen, making scrambled eggs and eating flan. The scrambled eggs were prepared with baloney and ranch dressing; the flan was store-bought. Desert Sun


For a Santa Rosa family that lost their home in the 2017 Tubbs fire, getting caught up in the coronavirus panic is almost too much to bear. Neither mother nor daughter has shown symptoms of the virus, but they are under county-supervised “self-quarantine” after returning home from visiting family in China. They say neighbors have have called the police on them and people have gone “bizonkers.” Mercury News


How a fire in the Inland Empire could spell doom for the worldwide vinyl LP boom. A fire at the company that supplies a reported 75% of the world’s blank lacquers (the shiny circular plates essential for the production of vinyl records) has disrupted the supply chain for making vinyl albums. Los Angeles Times


Los Angeles: partly sunny, 70. San Diego: partly sunny, 66 . San Francisco: sunny, 62. San Jose: sunny, 68. Sacramento: sunny, 67. More weather is here.


Today’s California memory comes from Charles Gropman:

I remember smog. I was born in 1949, so when I was 10 years old and riding all over the Westside with my best friend Marty there would be those days when we would have to pull over for a while and let the tears wash away the sharp burning dirty air in our eyes.


If you have a memory or story about the Golden State, share it with us. (Please keep your story to 100 words.)

Please let us know what we can do to make this newsletter more useful to you. Send comments, complaints, ideas and unrelated book recommendations to Julia Wick. Follow her on Twitter @Sherlyholmes.