Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 28, 1992 TAG: 9202280135
SECTION: BUSINESS PAGE: B4 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
MILKEN FAR FROM DESTITUTE
Drexel Burnham Lambert Inc. attorneys released details Thursday of a proposed $1.3 billion settlement of the suits that accuse former junk-bond king Michael Milken of defrauding investors and helping plunder savings and loans.Milken will still have about $125 million after settling scores of lawsuits, his former employer's attorney said. In 1989, Forbes magazine estimated Milken's wealth at almost $1.3 billion.
Milken will pay an additional $500 million to end the legal wrangling, beyondthe $400 million he had contributed to a settlement fund and $200 million in fines.
But the lawyers revealed for the first time that the $500 million represents about 80 percent of Milken's remaining wealth, which would leave him with about $125 million.
Milken's spokeswoman, Ann Brackbill, declined to comment on the settlement or the worth of the financier, who is serving a 10-year prison sentence after pleading guilty to securities fraud.
Milken, 45, was one of the first Wall Street experts to capitalize on the potential of junk bonds, which are debt securities generally issued by companies unable to obtain investment-grade credit ratings.
Junk bonds raised cash for the corporate takeover boom of the 1980s and were blamed for the failure of many savings and loans that used depositors' money to invest in them. Many of those investors saw the bonds go bad, living up to their nickname.
The settlement doesn't tap the wealth of other Milken family members, including Milken's brother, Lowell, another former highly paid Drexel employee.
Besides Milken's contribution, the settlement includes $300 million contributed by 200 former and current Drexel employees. Their part will come from liquidations of their interest in investment partnerships formed by Drexel. The remaining $100 million would come from insurance policies carried by Drexel officers and directors.
U.S. District Judge Milton Pollack, who oversaw negotiations starting in November that led to the settlement, has scheduled a March 6 hearing to consider approving it.
Pollack said he ordered a financial investigation of Milken to make sure "there had been no money stashed away" that could be used for the settlement. As part of the pact, Milken agreed that if any additional assets are discovered, he must forfeit them entirely to the settlement fund and face perjury charges.
Asked why Milken didn't have to pay a greater amount toward the settlement, the judge said: "Not a single case had been tried - there was no judgment against him."
Pollack said Milken agreed to give up several claims he had filed against Drexel seeking money.
Also ended by the settlement are lawsuits filed by the Federal Deposit Insurance Corp. against Milken, seeking money to pay for the thrift bailout.