Michael Milken: Difference between revisions
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|birth_date = 1946-07-04 | |birth_date = 1946-07-04 | ||
|birth_place = Encino, California | |birth_place = Encino, California | ||
|charges = Securities | |charges = Securities fraud, filing false tax returns, assisting in filing a false tax return, securities reporting violations | ||
|status = Released | |sentence = 10 years (served 22 months) | ||
|facility = Federal Prison Camp Pleasanton | |||
|status = Released / Pardoned (2020) | |||
}} | }} | ||
'''Michael Milken''' (born July 4, 1946) is an American financier who | '''Michael Robert Milken''' (born July 4, 1946) is an American financier and philanthropist who became known as the "Junk Bond King" for his pioneering work in the high-yield bond market during the 1980s. In 1990, Milken pleaded guilty to securities and tax violations and was sentenced to ten years in federal prison. He served 22 months before his release in 1993. On February 18, 2020, President Donald Trump granted Milken a full pardon.<ref name="wapo-pardon">The Washington Post, "Who is Michael Milken, the junk bond king Trump just pardoned?", February 18, 2020, https://www.washingtonpost.com/business/2020/02/18/michael-milken-pardon/.</ref> | ||
== Early | == Early Life and Education == | ||
Milken | Michael Milken was born on July 4, 1946, in Encino, California, a suburb of Los Angeles. His father was an accountant. Milken was academically gifted and became head cheerleader at Birmingham High School, where he graduated in 1964. | ||
Milken attended the University of California, Berkeley, graduating Phi Beta Kappa with a bachelors degree in business administration in 1968. He then earned an MBA from the Wharton School of the University of Pennsylvania, where he began studying low-grade bonds, which would later become his specialty.<ref name="britannica">Britannica Money, "Michael Milken," https://www.britannica.com/money/Michael-R-Milken.</ref> | |||
== Career at Drexel Burnham Lambert == | |||
== | === Rise of the Junk Bond King === | ||
Milken joined Drexel Burnham Lambert (then Drexel Firestone) in 1969 and was assigned to trade bonds. In 1971, he became head of the firms bond-trading department and began focusing on high-yield bonds—non-investment-grade securities that offered higher returns but carried greater risk. | |||
== | Milken recognized that many "junk bonds" issued by smaller or financially troubled companies were undervalued. He built a highly profitable trading operation and convinced Drexel to use high-yield bonds to finance corporate takeovers and leveraged buyouts. His operations moved to Beverly Hills, California, where he ran what became known as the "X-shaped trading desk."<ref name="npr-pardon">NPR, "A Look At The Newly Pardoned Michael Milken, A Junk Bond King Turned Philanthropist," February 19, 2020, https://www.npr.org/2020/02/19/807488161/a-look-at-the-newly-pardoned-michael-milken-a-junk-bond-king-turned-philanthropi.</ref> | ||
=== Unprecedented Compensation === | |||
* Milken Institute | |||
By the mid-1980s, Milken had transformed Drexel into one of Wall Streets most powerful firms. His high-yield bond department financed many of the decades largest corporate takeovers and made Drexel enormously profitable. Milkens compensation exceeded $1 billion over a four-year period in the late 1980s—a record for American income at that time. | |||
== Federal Investigation and Charges == | |||
=== Ivan Boesky and the Investigation === | |||
In 1986, arbitrageur Ivan Boesky was convicted of insider trading and agreed to cooperate with federal investigators. Boesky implicated Milken and Drexel Burnham Lambert in illegal activities, triggering a major investigation by the U.S. Securities and Exchange Commission and federal prosecutors.<ref name="cnn-pardon">CNN Business, "Trump pardons junk bond king Michael Milken," February 18, 2020, https://www.cnn.com/2020/02/18/investing/michael-milken-pardon.</ref> | |||
=== Indictment === | |||
In March 1989, a federal grand jury indicted Milken, his brother Lowell Milken, and colleague Bruce Newberg on 98 counts of racketeering, mail fraud, and securities fraud. Prosecutors sought $1.85 billion in forfeitures. | |||
The indictment alleged that Milken had engaged in insider trading, stock manipulation, and other fraudulent practices while at Drexel. The case was led by U.S. Attorney Rudolph Giuliani, who made prosecution of Wall Street fraud a centerpiece of his tenure. | |||
=== Guilty Plea === | |||
In April 1990, Milken entered into a plea agreement with federal prosecutors. He pleaded guilty to six felony counts: securities fraud, filing false tax returns, assisting in the filing of a false tax return, and securities reporting violations. Notably, he did not plead guilty to racketeering or insider trading charges.<ref name="ojp">Office of Justice Programs, "Highly Confident: The Crime and Punishment of Michael Milken," https://www.ojp.gov/ncjrs/virtual-library/abstracts/highly-confident-crime-and-punishment-michael-milken.</ref> | |||
As part of the plea agreement, Milken agreed to pay $200 million in fines and $400 million in restitution to defrauded investors. He also accepted a lifetime ban from the securities industry. | |||
Drexel Burnham Lambert, weakened by the scandal and legal costs, filed for bankruptcy in February 1990. | |||
== Sentencing == | |||
In November 1990, U.S. District Judge Kimba Wood sentenced Milken to ten years in federal prison. Judge Wood stated that Milken had committed serious crimes that had significant impact on the securities markets. | |||
In addition to the prison term, Milken was: | |||
* Fined $600 million (including the amounts in his plea agreement) | |||
* Permanently barred from the securities industry | |||
* Required to perform 5,400 hours of community service | |||
== Incarceration == | |||
Milken reported to the Federal Prison Camp Pleasanton in Northern California to serve his sentence. His sentence was later reduced, first to seven years and then to two years, based on his cooperation in providing testimony against former colleagues and for good behavior. | |||
Milken was released from federal prison in January 1993 after serving approximately 22 months. | |||
== Life After Release == | |||
=== Philanthropy and Cancer Research === | |||
After his release, Milken became a prominent philanthropist, particularly in the field of medical research. Having been diagnosed with prostate cancer in 1993, he dedicated substantial resources to cancer research and treatment. | |||
Milken founded the Prostate Cancer Foundation, which has raised hundreds of millions of dollars for research. He also established the Milken Institute, a nonprofit, nonpartisan economic research organization that hosts annual conferences and produces research on economic policy. | |||
Through his charitable foundations, Milken has donated billions of dollars to education, medical research, and other causes.<ref name="cnbc-pardon">CNBC, "Trump pardons Michael Milken, face of 1980s insider trading scandals," February 18, 2020, https://www.cnbc.com/2020/02/18/trump-pardons-michael-milken-face-of-1980s-financial-scandals.html.</ref> | |||
=== Continued Business Activities === | |||
Despite his lifetime ban from the securities industry, Milken has remained active in business and investment through activities not covered by the SEC ban. As of 2022, his net worth was estimated at approximately $6 billion. | |||
== Presidential Pardon == | |||
On February 18, 2020, President Donald Trump granted Milken a full pardon, formally forgiving his 1990 conviction. The pardon came after lobbying by numerous prominent supporters, including then-House Minority Leader Kevin McCarthy, media mogul Rupert Murdoch, casino magnate Sheldon Adelson, and—notably—Rudy Giuliani, the former prosecutor whose office had brought the original charges against Milken.<ref name="wapo-pardon" /> | |||
The White House noted that the pardon did not affect Milkens lifetime ban from working in the securities industry. | |||
The pardon drew criticism from some observers who argued that Milkens crimes had contributed to the savings and loan crisis and had harmed numerous investors and pension funds. | |||
== Legacy == | |||
Milken remains a controversial figure. Supporters credit him with democratizing finance by making capital available to companies that traditional banks ignored, while critics argue that his activities contributed to corporate raiding, job losses, and financial instability. His case is studied in business schools and law schools as an example of the consequences of securities fraud and the complexities of white-collar crime. | |||
== References == | == References == | ||
<references /> | <references /> | ||
[[Category:High- | [[Category:High-Profile Federal Offenders]] | ||
Revision as of 21:39, 21 November 2025
| Michael Milken | |
|---|---|
| Born: | 1946-07-04 Encino, California |
| Charges: | Securities fraud, filing false tax returns, assisting in filing a false tax return, securities reporting violations |
| Sentence: | 10 years (served 22 months) |
| Facility: | Federal Prison Camp Pleasanton |
| Status: | Released / Pardoned (2020) |
Michael Robert Milken (born July 4, 1946) is an American financier and philanthropist who became known as the "Junk Bond King" for his pioneering work in the high-yield bond market during the 1980s. In 1990, Milken pleaded guilty to securities and tax violations and was sentenced to ten years in federal prison. He served 22 months before his release in 1993. On February 18, 2020, President Donald Trump granted Milken a full pardon.[1]
Early Life and Education
Michael Milken was born on July 4, 1946, in Encino, California, a suburb of Los Angeles. His father was an accountant. Milken was academically gifted and became head cheerleader at Birmingham High School, where he graduated in 1964.
Milken attended the University of California, Berkeley, graduating Phi Beta Kappa with a bachelors degree in business administration in 1968. He then earned an MBA from the Wharton School of the University of Pennsylvania, where he began studying low-grade bonds, which would later become his specialty.[2]
Career at Drexel Burnham Lambert
Rise of the Junk Bond King
Milken joined Drexel Burnham Lambert (then Drexel Firestone) in 1969 and was assigned to trade bonds. In 1971, he became head of the firms bond-trading department and began focusing on high-yield bonds—non-investment-grade securities that offered higher returns but carried greater risk.
Milken recognized that many "junk bonds" issued by smaller or financially troubled companies were undervalued. He built a highly profitable trading operation and convinced Drexel to use high-yield bonds to finance corporate takeovers and leveraged buyouts. His operations moved to Beverly Hills, California, where he ran what became known as the "X-shaped trading desk."[3]
Unprecedented Compensation
By the mid-1980s, Milken had transformed Drexel into one of Wall Streets most powerful firms. His high-yield bond department financed many of the decades largest corporate takeovers and made Drexel enormously profitable. Milkens compensation exceeded $1 billion over a four-year period in the late 1980s—a record for American income at that time.
Federal Investigation and Charges
Ivan Boesky and the Investigation
In 1986, arbitrageur Ivan Boesky was convicted of insider trading and agreed to cooperate with federal investigators. Boesky implicated Milken and Drexel Burnham Lambert in illegal activities, triggering a major investigation by the U.S. Securities and Exchange Commission and federal prosecutors.[4]
Indictment
In March 1989, a federal grand jury indicted Milken, his brother Lowell Milken, and colleague Bruce Newberg on 98 counts of racketeering, mail fraud, and securities fraud. Prosecutors sought $1.85 billion in forfeitures.
The indictment alleged that Milken had engaged in insider trading, stock manipulation, and other fraudulent practices while at Drexel. The case was led by U.S. Attorney Rudolph Giuliani, who made prosecution of Wall Street fraud a centerpiece of his tenure.
Guilty Plea
In April 1990, Milken entered into a plea agreement with federal prosecutors. He pleaded guilty to six felony counts: securities fraud, filing false tax returns, assisting in the filing of a false tax return, and securities reporting violations. Notably, he did not plead guilty to racketeering or insider trading charges.[5]
As part of the plea agreement, Milken agreed to pay $200 million in fines and $400 million in restitution to defrauded investors. He also accepted a lifetime ban from the securities industry.
Drexel Burnham Lambert, weakened by the scandal and legal costs, filed for bankruptcy in February 1990.
Sentencing
In November 1990, U.S. District Judge Kimba Wood sentenced Milken to ten years in federal prison. Judge Wood stated that Milken had committed serious crimes that had significant impact on the securities markets.
In addition to the prison term, Milken was:
- Fined $600 million (including the amounts in his plea agreement)
- Permanently barred from the securities industry
- Required to perform 5,400 hours of community service
Incarceration
Milken reported to the Federal Prison Camp Pleasanton in Northern California to serve his sentence. His sentence was later reduced, first to seven years and then to two years, based on his cooperation in providing testimony against former colleagues and for good behavior.
Milken was released from federal prison in January 1993 after serving approximately 22 months.
Life After Release
Philanthropy and Cancer Research
After his release, Milken became a prominent philanthropist, particularly in the field of medical research. Having been diagnosed with prostate cancer in 1993, he dedicated substantial resources to cancer research and treatment.
Milken founded the Prostate Cancer Foundation, which has raised hundreds of millions of dollars for research. He also established the Milken Institute, a nonprofit, nonpartisan economic research organization that hosts annual conferences and produces research on economic policy.
Through his charitable foundations, Milken has donated billions of dollars to education, medical research, and other causes.[6]
Continued Business Activities
Despite his lifetime ban from the securities industry, Milken has remained active in business and investment through activities not covered by the SEC ban. As of 2022, his net worth was estimated at approximately $6 billion.
Presidential Pardon
On February 18, 2020, President Donald Trump granted Milken a full pardon, formally forgiving his 1990 conviction. The pardon came after lobbying by numerous prominent supporters, including then-House Minority Leader Kevin McCarthy, media mogul Rupert Murdoch, casino magnate Sheldon Adelson, and—notably—Rudy Giuliani, the former prosecutor whose office had brought the original charges against Milken.[1]
The White House noted that the pardon did not affect Milkens lifetime ban from working in the securities industry.
The pardon drew criticism from some observers who argued that Milkens crimes had contributed to the savings and loan crisis and had harmed numerous investors and pension funds.
Legacy
Milken remains a controversial figure. Supporters credit him with democratizing finance by making capital available to companies that traditional banks ignored, while critics argue that his activities contributed to corporate raiding, job losses, and financial instability. His case is studied in business schools and law schools as an example of the consequences of securities fraud and the complexities of white-collar crime.
References
- ↑ 1.0 1.1 The Washington Post, "Who is Michael Milken, the junk bond king Trump just pardoned?", February 18, 2020, https://www.washingtonpost.com/business/2020/02/18/michael-milken-pardon/.
- ↑ Britannica Money, "Michael Milken," https://www.britannica.com/money/Michael-R-Milken.
- ↑ NPR, "A Look At The Newly Pardoned Michael Milken, A Junk Bond King Turned Philanthropist," February 19, 2020, https://www.npr.org/2020/02/19/807488161/a-look-at-the-newly-pardoned-michael-milken-a-junk-bond-king-turned-philanthropi.
- ↑ CNN Business, "Trump pardons junk bond king Michael Milken," February 18, 2020, https://www.cnn.com/2020/02/18/investing/michael-milken-pardon.
- ↑ Office of Justice Programs, "Highly Confident: The Crime and Punishment of Michael Milken," https://www.ojp.gov/ncjrs/virtual-library/abstracts/highly-confident-crime-and-punishment-michael-milken.
- ↑ CNBC, "Trump pardons Michael Milken, face of 1980s insider trading scandals," February 18, 2020, https://www.cnbc.com/2020/02/18/trump-pardons-michael-milken-face-of-1980s-financial-scandals.html.