Michael Milken: Drexel's Junk Bond Desk, 22 Months in Prison and a Pardon

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Michael Milken was born in 1946 in Encino, California, led the cheerleading squad at Birmingham High School, graduated from UC Berkeley with highest honors in 1968 and earned an MBA at Wharton. At Berkeley he absorbed W. Braddock Hickman's research showing that diversified portfolios of low-rated bonds outperformed safe ones even after defaults. He joined Drexel in 1969, built its high-yield department, and in 1978 moved the operation to Century City in Los Angeles, far from New York oversight. His network of buyers, including Executive Life and Columbia Savings, financed the 1980s leveraged buyout boom, and a Drexel "highly confident" letter, though legally non-binding, was treated as money in the bank.

The fall began in 1986 when Ivan Boesky pleaded guilty and implicated Milken in insider trading and stock parking. Rudy Giuliani threatened Drexel with RICO, and the discovery of MacPherson Partners, which received Storer Broadcasting warrants and included Milken, his children and outside money managers, ended Drexel's support. Indicted on 98 counts in 1989, Milken pleaded guilty in April 1990 to six securities and tax counts, paid over $1 billion and was barred from the industry. Released in 1993, he was diagnosed with prostate cancer that month and founded the Prostate Cancer Foundation, later FasterCures, before a 2020 pardon.

• Over a 17-year stretch, his operation reportedly had only four down months.
• He earned over $1 billion in personal compensation in a four-year period in the late 1980s.
• Prosecutors also indicted his brother Lowell, a tactic legal scholars criticized.
• Judge Kimba Wood sentenced him to 10 years; he served 22 months.
• Rudy Giuliani, who had prosecuted him, was among those urging President Trump to grant the February 2020 pardon.