Word: milken
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...Even as Milken heard his sentence, the firm he had built into a financial powerhouse was under legal siege once again. Federal regulators earlier this month filed a $6.8 billion claim against the bankrupt Drexel for allegedly rigging the junk-bond market and selling bonds to savings and loans before the value of the IOUs collapsed. The government expects to lose at least $2 billion on junk bonds that it has taken over from seized thrifts. Drexel said it would strongly contest the government claim...
When he emerges from prison, Milken will remain an extravagantly wealthy man. At the height of his power, from 1983 to 1987, Drexel paid him $1.1 billion for pioneering junk bonds and turning them into Wall Street's most lucrative money machine. Instead of squandering the fortune on yachts and jets, Milken formed investment partnerships that earned him additional millions. But riches will not shield Milken from the loss of his freedom. In an 11-page plea for leniency that he wrote to Wood last month, Milken acknowledged, "All people, I am sure, have a fear of incarceration and separation...
...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...