Washington, Feb 27: Fallen junk bond king Michael Milken, who paid $1.1 billion in fines for 1980s fraud, has agreed to pay $47 million more to resolve new charges that he illegally worked in the securities business.Despite the fact that Milken was hit with the new case, he settled it without admitting guilt and federal prosecutors agreed to let his probation for the earlier crimes end without seeking a revocation.Milken has had his probation extended numerous times as the Securities and Exchange Commission investigated possible wrongdoing related to consulting work he did after serving a two-year prison term. The current and last possible extension ends March 1.
A finding of wrongdoing could have lead to a new prison term for the financier, who is battling prostate cancer. But Milken did not admit guilt in the latest settlement, and the money was described as a repayment of fees, not a fine or penalty.
The US attorney's office in Manhattan, in a letter to US district Judge Kimba Wood, said that it"has determined not to recommend the initiation of violation of probation proceedings" against Milken.
Mark Pomerantz, chief of the criminal division, said there was insufficient evidence against the man who many consider the most important figure of high finance in the 1980s."While we have considered Milken's settlement with the SEC in our decision, we should make explicit that our decision not to proceed with a probation violation proceeding is based on all of the evidence and the totality of the circumstances," he wrote.
Milken's lawyer in Los Angeles, Richard Sandler, said the SEC did not allege that Milken willfully violated terms of the 1991 SEC settlement or securities laws.
"Mr Milken received legal advice before engaging in any consulting activities," Sandler said. "However, Mr Milken is battling prostate cancer and has decided not to contest the SEC allegations to determine who is right and who is wrong."
William McLucas, the SEC's director of enforcement, denied criticism that thecommission had filed the case because of "who Milken is."
"I've heard suggestions that the SEC didn't like him. That's just not true. There was an order and it was not being obeyed," McLucas told Reuters.The SEC alleged that MC Group, which Milken founded and owned, acted as broker in a deal in which MCI Communications Corp would invest up to $2 billion in News Cor. Ltd, Rupert Murdoch's Australia-based media conglomerate.
In 1995, MCI and News Corp agreed to the deal. To date, MCI has invested at least $1.35 billion in News Corp, the SEC said. It added that Milken and MC Group made $42 million on the transaction and a second transaction it did not detail.
Milken, the former Drexel Burnham Lambert Inc executive who pioneered the use of high-risk, high-yield junk bonds in the 1980s, pleaded guilty to six felony charges involving securities fraud violations in April 1990.
Drexel, the powerhouse behind many of the mega deals of the last decade, also pleaded guilty to six felonies, filed for bankruptcy in1990 and later went out of business.
The SEC brought the current civil lawsuit because Milken is permanently barred from operating in the securities industry under a 1991 order related to settlement of his crimes.
It said he introduced the chairmen of MCI and News Corp, presumably Gerald Taylor and Rupert Murdoch, to each other and proposed they do business. A year or so later, the two forged the pact for MCI to invest in News Corp, the SEC said.
It added that MC Group was involved in negotiating the structure and terms of the deal, the dividend rate, voting rights and control provisions that MCI would have, as well as the maximum stake MCI could acquire.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
