Word: milken
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Dates: during 1990-1999
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...precisely such fears that Judge Wood intends to reinforce with her stiff sentencing of Milken, say experts. "We are dealing here with a theme that resonates very strongly in American society," says Columbia's Coffee. "It is that the abuse of responsibility by those in high places will be dealt with harshly." The government hopes to make the threat of harsh sentences for white-collar felons the pointed lesson of Michael Milken's fall...
Ruckdeschel, Ventura and Loncar inhabit the lower end of the food chain that fed Michael Milken and a handful of others hundreds of millions of dollars in personal profits during the leveraged-buyout binge of the '80s. Now the continuing collapse of the junk-bond market is starving more than 270,000 First Investors clients, many of whom were lured in by deceptive tactics like those used by Ventura and Loncar. Customer losses nationwide could top $500 million...
First Investors was one of the first mutuals to buy junk in quantity from Milken. The high-flying paper helped two of the firm's 25 funds (the Fund for Income and the High Yield Fund) grow to more than $2.4 billion in assets. At its peak, First Investors commanded an army of 5,000 sales agents spread throughout 285 offices in 49 states -- most of them inexperienced, ill trained and often crammed like cattle into boiler-room offices. The agents memorized scripted pitches that they parroted to customers, usually over the phone. The firm also uses a pyramid-style...
...share prices in both funds have dropped more than 30% (see graph). Even on a long- term basis, the Fund for Income and the High Yield Fund are among the industry's worst performers. Benalder Bayse Jr., who from 1985 to 1989 ran both funds, testified with immunity at Milken's presentencing hearing that a Milken crony, Roy Johnson, helped him land what he described as a "lucrative job" at First Investors. Thereafter, according to Bayse, Johnson funneled junk bonds to him, both for the mutual funds and, in some cases, for Bayse's personal account...
Neither Glenn Head nor David Grayson, First Investors' chairman and president respectively, is talking publicly about his role. Both are named in the states' lawsuits and will "vigorously" contest them, says their lawyer. Like Milken, they too will have their day in court...