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Highly Confident: The Crime and Punishment of Michael Milken

NCJ Number
J Kornbluth
Date Published
384 pages
This book chronicles the personal and career history of Michael Milken, the head of Drexel's High-Yield Bond Department, with attention to the events and personalities associated with Milken's 1990 guilty plea under Federal charges of securities violations.
Although Milken is associated with Drexel's lucrative practices of leveraged buy-outs of companies, hostile take- overs, and "junk" bonds, the charges to which Milken pled guilty had nothing to do with these practices; nor did they involve the insider-trading practices associated with Ivan Boesky, who was one of Milken's clients. Two themes characterized the five offenses to which Milken pled guilty: a commitment to clients that failed to acknowledge legal limits and crimes that had nothing to do with junk bonds. Specifically, Milken guaranteed Boesky against loss and helped him evade the net-capital rules in some transactions. He made adjustments in the price of securities bought and sold for another client without disclosing this to the fund's customers; he helped the same client to lower his taxes by arranging unprofitable transactions. At sentencing, the judge acknowledged that the damage of Milken's actions amounted to a relatively meager $318,000 and that his offenses were technical violations. His sentence was to pay $600 million in fines and serve 2 years imprisonment consecutively for each violation (10 years in all), followed by 1,800 hours of full-time community service a year for 3 years. The judge reasoned that "technical crimes are hard to detect, and crimes that are hard to detect warrant greater punishment in order to be effective in deterring others from committing them." The author focuses on the various pressures brought on Milken by Federal prosecutors to plead guilty, such that Milken believed the risks of defending himself at trial were much too great. The author concludes that Milken's actions were not governed by criminal intent, but rather resulted from failure to give detailed attention to laws that governed financial transactions with his clients. Milken's fortune, however, resulted from legitimate business transactions. Subject index and a section on sources and acknowledgments


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