Word: milken
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Even for a billionaire, the $600 million penalty that junk-bond king Michael Milken has agreed to pay is a breathtaking sum. Milken will be forfeiting more money than any other felon in history. By another measure, the penalty is even larger than Union Carbide's $470 million settlement offer for the Bhopal disaster. Yet Milken's fortune, which has been estimated at $1.2 billion, is by no means wiped out. The frugal financier, who invested his monumental income instead of spending it, possesses an intricate web of assets that have been well sheltered from taxes and prying eyes...
...workaholic Milken, 43, power is more precious than money, so his prison term is the real penalty. By pleading guilty to six counts of securities fraud (reduced from 98 criminal charges in the original indictment), Milken faces as much as 28 years behind bars. But oddsmakers bet that when Milken is sentenced in October he will get five years and serve less than that...
When he gets out, Milken can go back to tending a world-class fortune that began with a $25,000 salary when he joined Drexel Burnham Lambert in 1970. While he was head of Drexel's junk-bond department, his compensation zoomed from $45.7 million in 1983 to more than $550 million in 1987, the highest annual paycheck in corporate history. All told, he earned $1.1 billion during those golden years...
...Milken's sentencing is delayed until Oct. 1, in part to allow the court to deliberate on the prison term. But that will not be the end of his legal problems. Milken has already been hit by a dozen class-action civil suits filed by investors who claim they lost money as a result of his wrongdoing. The Securities and Exchange Commission is setting up a fund for investor claims, using $400 million of Milken's fine. When that money runs out, investors will be free to try to collect directly from Milken, a process that is likely...
Gorbachev is moving too cautiously to a free-market system. TIME gives a prescription for action. Bond wizard Michael Milken cops a plea, but he's getting off light...