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Michael Milken

Michael Milken mugshot

The arrest of Michael Milken:

The so-called "Junk Bond King", Michael Milken, was the poster boy for greed in the financial markets in the 1980's.

Michael Milken

Michael Robert Milken was born in Encino, California and wasn't always a financial hotshot. While in high school he worked in a local diner and his classmates included actresses Sally Fields and Cindy Williams.

He helped develop the market for risky, high yield bonds, also known as junk bonds. They enabled him to raise huge amounts of money very quickly. It spurred the growth of many enterprises and paid him very handsomely. As head of the high yield department at Drexel Burnham Lambert in the late 1980's, Milken's income topped a staggering one billion dollars over a four year period.

The charges against Milken resulted from an insider trading investigation. It was one of the first instances when the RICO laws were used against a person with no ties to organized crime. Rudolph Giuliani, then the U.S. Attorney for the southern District of New York and future New York City Mayor, led the probe.

Milken was arrested after being indicted for violating U.S securities laws – specifically, 98 counts of racketeering and fraud.

Michael Milken on the cover of Time magazine

He pleaded guilty to 6 counts of securities and tax violations. As part of his plea deal, Milken admitted to securities and reporting violations but not to the charges of racketeering or insider trading.

He was fined 600-million dollars and was permanently barred from the securities industry.

Milken was also sentenced to ten years in prison. However, that was later reduced to two years because he cooperated with testimony against former colleagues and for good behavior. He served 22 of the 24 months before being released.

Michael Milken

Since then, he has concentrated on philanthropic work, primarily funding medical research.

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