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high risk$6.2 billion (estimated, 2024)
Michael Milken
Convicted Financier; Junk Bond King; Architect of the 1980s Leveraged Buyout Revolution
Head of High-Yield Bond Department, Drexel Burnham Lambert; Convicted Felon; Presidential Pardon Recipient
Overview
Michael Robert Milken is an American financier who virtually invented the high-yield (junk) bond market and used it to finance the corporate takeover wave of the 1980s from his Beverly Hills office at Drexel Burnham Lambert. At the zenith of his power, Milken earned $550 million in a single year (1987) and controlled the flow of capital to an entire generation of corporate raiders, leveraged buyout firms, and emerging companies. Federal prosecutors led by U.S. Attorney Rudolph Giuliani indicted Milken on 98 counts of racketeering and securities fraud in March 1989. After a year of legal warfare, Milken pleaded guilty to six felonies - including securities fraud, mail fraud, and aiding in the filing of false tax returns - and agreed to pay $600 million in fines and restitution. Judge Kimba Wood sentenced him to 10 years in federal prison, though the sentence was later reduced to two years for cooperation. He served 22 months at a minimum-security federal camp in Pleasanton, California. After his release, Milken was permanently barred from the securities industry by the SEC. Despite his felony convictions, he rebuilt a fortune estimated at over $6 billion through investments in education, technology, and healthcare. On February 18, 2020, President Donald Trump granted Milken a full presidential pardon, erasing his six felony convictions - a decision supported by Rudolph Giuliani, the very prosecutor who had originally indicted him.
Key Affiliations
Controversies & Concerns
Indicted on 98 counts of racketeering (RICO) and securities fraud by U.S. Attorney Rudolph Giuliani in March 1989; the most sweeping securities fraud indictment in Wall Street history
Pleaded guilty to 6 felonies in April 1990, including securities fraud, mail fraud, and aiding in filing false tax returns
Sentenced to 10 years in prison by Judge Kimba Wood; served 22 months after sentence reduction for cooperating
Paid $600 million in criminal fines and restitution - the largest individual financial penalty at that time
Earned $550 million in a single year (1987) while orchestrating illegal schemes at Drexel Burnham Lambert
His prosecution directly caused the collapse and bankruptcy of Drexel Burnham Lambert in February 1990, destroying over 10,000 jobs
Permanently barred from the securities industry by the SEC
Granted full presidential pardon by Donald Trump on February 18, 2020, erasing all six felony convictions
Pardon supported by Rudolph Giuliani - the same prosecutor who originally brought the 98-count indictment against him
Rebuilt fortune exceeding $6 billion despite securities industry ban, raising questions about effectiveness of financial penalties
Brother Lowell Milken was indicted on 13 counts as leverage to secure Michael's guilty plea; charges were dropped as part of the deal
Multiple former associates cooperated against him, including Ivan Boesky (who wore a wire), Dennis Levine, and Martin Siegel
Related Investigations (2)
Criminal Charges & Violations
5 documented violations
18 U.S.C. § 1962 (RICO)Racketeering - operating a criminal enterprise through Drexel's high-yield bond department(Federal)
15 U.S.C. § 78j(b), SEC Rule 10b-5Securities Fraud - manipulating securities prices and trading on insider information(Federal)
18 U.S.C. § 1341Mail Fraud - using the mails to further securities fraud schemes(Federal)
26 U.S.C. § 7206Tax Fraud - aiding in the filing of false tax returns for clients(Federal)
18 U.S.C. § 1001Concealment - hiding information from the SEC during investigations(Federal)
Known Associates & Connections
Ivan Boesky
Wall Street arbitrageur who cooperated with SEC and secretly recorded Milken
Dennis Levine
Drexel investment banker whose arrest started the chain of cooperation leading to Milken
Lowell Milken
Brother and senior VP at Drexel; indicted on 13 counts as leverage; charges dropped in plea deal
Martin Siegel
M&A banker at Kidder Peabody who sold insider information to Boesky
Fred Joseph
CEO of Drexel Burnham Lambert who failed to supervise Milken's operations
Rudolph Giuliani
U.S. Attorney who brought the 98-count indictment; later supported Trump's pardon of Milken
Judge Kimba Wood
Federal judge who sentenced Milken to 10 years, later reduced for cooperation
Sources & Documentation
6 documented sources from official records, investigations, and reports
United States v. Michael Milken, Sentencing Memorandum, S.D.N.Y. (1990)(1990)
SEC v. Michael R. Milken, Civil Action (1990)(1990)
Den of Thieves by James B. Stewart (Simon & Schuster, 1991)(1991)
The Predators' Ball by Connie Bruck (Simon & Schuster, 1988)(1988)
Highly Confident: The Crime and Punishment of Michael Milken by Jesse Kornbluth (William Morrow, 1992)(1992)
Executive Grant of Clemency: Michael R. Milken (White House, February 18, 2020)(2020)
Personal Information
- Born
- July 4, 1946
- Birthplace
- Encino, Los Angeles, California, USA
- Also Known As
- The Junk Bond King, The King of Wall Street
Education
- •Birmingham High School, Van Nuys, California
- •University of California, Berkeley (B.S., 1968)
- •Wharton School, University of Pennsylvania (MBA, 1970)
Key Timeline
July 4, 1946
Born in Encino, California; grows up in a middle-class Jewish family in the San Fernando Valley
1968
Graduates from UC Berkeley; develops interest in high-yield bonds after reading W. Braddock Hickman's research on low-rated bond performance
1970
Earns MBA from Wharton School; joins Drexel Firestone (later Drexel Burnham Lambert) in Philadelphia
1978
Moves Drexel's high-yield bond operations to Beverly Hills, California; begins building the junk bond empire
1983-1986
Hosts annual "Predators' Ball" high-yield bond conferences at the Beverly Hilton, attracting corporate raiders and LBO firms seeking financing
1986
Ivan Boesky cooperates with the SEC and secretly records conversations that implicate Milken in insider trading conspiracy
1987
Earns $550 million in compensation from Drexel - the highest income ever reported on Wall Street at that time
March 29, 1989
Indicted on 98 counts of racketeering and securities fraud by U.S. Attorney Rudolph Giuliani; brother Lowell also indicted on 13 counts
April 24, 1990
Pleads guilty to 6 felonies and agrees to pay $600 million in fines and restitution; charges against brother Lowell dropped
November 21, 1990
Sentenced to 10 years in federal prison by Judge Kimba Wood at U.S. District Court, Southern District of New York
March 1991
Reports to the Federal Prison Camp at Pleasanton, California to begin serving sentence
January 1993
Released after serving 22 months; sentence reduced by Judge Wood for substantial cooperation
1993
Diagnosed with prostate cancer; begins advocacy for medical research funding
1998
Founds the Milken Institute, an economic think tank based in Santa Monica, California
1998
SEC accuses Milken of violating his lifetime securities industry ban by consulting on deals; Milken pays $47 million to settle without admitting wrongdoing
February 18, 2020
President Donald Trump grants full presidential pardon, erasing all six felony convictions