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Milken to avoid court date
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February 26, 1998: 6:43 p.m. ET
One factor: former junk bond king's agreement to pay $47 million to SEC
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NEW YORK (CNNfn) - The U.S. Attorney's office in Manhattan said Friday it would not seek to prosecute former junk bond king Michael Milken, citing as a factor in its decision Milken's agreement to pay $47 million to settle a complaint against him by the Securities and Exchange Commission.
In 1991, as part of the punishment in his conviction for securities fraud, Milken was barred for life from participating in the brokerage industry.
However, the SEC said that Milken had violated terms of that agreement by acting as a securities broker in several deals, one of which was the 1995 agreement by MCI Communications Corp. to invest up to $2 billion in Rupert Murdoch's News Corp.
Milken agreed to pay $42 million plus $5 million in interest to settle the complaint. U.S. District Judge Milton Pollack in New York told CNNfn he signed the agreement Thursday.
Milken, who does not admit or deny his guilt in the agreement, faced the prospect of violation of parole proceedings, which could have been initiated upon the recommendation of the Attorney's office.
But in a letter to U.S. District Judge Kimba Wood, the Attorney's office said it found conflicting evidence of Milken's dealings in the securities industry, and evidence that Milken's lawyers had advised him his activities did not violate the conditions of his parole.
Richard Sandler, Milken's lawyer, said in a statement that Milken chose to settle the dispute because he is currently battling prostate cancer and did not want to engage in a legal contest of "who is right and who is wrong."
Milken made his name overseeing the junk bond business of Drexel Burnham Lambert Inc. In April 1990, he pleaded guilty to violations of securities laws. After the case was settled in 1991, he paid more than $1 billion in fines and served two years in prison.
The SEC complaint said that in order to get around being barred from participating in the securities industry, Milken, along with some partners, formed MC Group.
MC Group, according to the SEC, "introduced companies, suggested business arrangements between them, participated in negotiations regarding the structure of such transactions [and] received transaction-based compensation in the amount of $42 million."
Milken has been on probation since being released from prison in 1993.
That probation, originally due to expire on Feb. 29, 1996, has been extended several times as investigators looked into Milken's business dealings, including the MCI transaction. Milken's current probation expires March 1.
The SEC is not alleging any violations in relation to Milken's consulting activities regarding Time Warner Inc.'s $7.5 billion acquisition of Turner Broadcasting System Inc. Time Warner is the parent company of CNNfn.
--from staff and wire reports
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