(Bloomberg Opinion) -- Of all the pardons President Donald Trump has handed out and all the prison sentences he has commuted, it is hard to think of one less meaningful than the one he granted on Tuesday to Michael Milken. He is 73. He was released from prison 27 years ago. He is worth nearly $4 billion, most of which he has accrued since his release in 1993. Today, he presides over the Milken Institute, a highly regarded think tank based in Los Angeles. He spends millions on philanthropic pursuits.
Yet when his obituary is written, Milken’s decades of good works will take a back seat to the events that caused him to become the symbol of the “greed-is-good” 1980s. He will be remembered for how he invented junk bonds from his X-shaped desk in the Los Angeles office of Drexel Burnham Lambert, and how his creation became the means by which a new breed of investors such as Carl Icahn, Ron Perelman, T. Boone Pickens and others terrorized corporate America with their takeover attempts. And how Rudy Giuliani, the country’s top federal prosecutor at the time, finally brought Milken down, getting him to plead guilty to six felony charges, including conspiracy and fraud.
In the first paragraph of his Wikipedia page, it reads: [Milken] is noted for his role in the development of the market for high-yield bonds (“junk bonds”), and his conviction and sentence following a guilty plea on felony charges for violating U.S. securities laws.” No mere pardon is not going to change how the world remembers Michael Milken.
On the other hand, of all the pardons handed out by Trump, I can’t think of one that is more deserved. In his best-selling book about Milken, “Den of Thieves,” James B. Stewart described the junk-bond king as being at the center of “the greatest criminal conspiracy the financial world has ever known.” Well, that’s certainly what Giuliani wanted people to think, but it was never true. Giuliani perp-walked executives whom he never ended up charging. He put firms out of business for no good reason. A number of his highly publicized convictions were reversed on appeal.
As for Milken, he agreed to the plea bargain only after Giuliani indicted his brother and sent the FBI to interrogate his 92-year-old grandfather. Before sentencing, Judge Kimba Wood held an unusual hearing to allow prosecutors to lay out the case they would have brought had Milken gone to trial. It was far from a slam dunk; even Wood acknowledged that some of the testimony was ambiguous as to whether Milken had manipulated stock or committed insider trading. It was clear from the hearing that had Milken gone to trial, he had a decent chance of winning. Although Wood originally sentenced Milken to 10 years in prison, she eventually reduced it to two.
In her remarks before sentencing Milken, Wood noted that many of the letters she received said that Milken should be punished because
We as a society must find those responsible for the alleged abuses of the 1980s, economic harm caused savings and loan associations, takeover targets and those allegedly injured by the issuance of junk bonds as well as by insider trading and other alleged abuses, and punish these criminals in proportion to the losses believed to have been suffered. These writers ask for a verdict on a decade of greed.
Such sentiments, while understandable, could not be the basis for sentencing Milken, Wood concluded; she had to focus on the crimes to which he had pleaded guilty. And yet, it has always seemed to me that Milken was punished for these much broader transgressions. Here’s Stewart again, from “Den of Thieves,” as part of his case against Milken:
Thousands of workers lost their jobs, companies loaded up with debt to pay for deals, profits were sacrificed to pay interest cost on the borrowings, and even so, many companies were forced into bankruptcies or restructurings. Bondholders and shareholders lost many millions more.
Milken was no saint. He was unquestionably greedy, at least by the standards of the time. He had plenty of conflicts of interest — putting his own money in funds that invested in takeover plays his junk bonds were making possible. He took advantage of less sophisticated players, like S&L operators who were buying his bonds.
But was he truly the financial criminal he’s been portrayed as? Probably not. They say that Milken has been trying to get a pardon since the Clinton administration — with his old adversary Giuliani advocating on his behalf. Now he’s got his wish. Given the way it’s brought all the old issues to the surface again, I have to wonder: Was it really worth it?
(Corrects the shape of Michael Milken’s desk in the second paragraph.)
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Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."
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