United States v. Milken: A Case Study

The most recent financial crisis that began in 2008 has resulted in a call, mostly ignored, for significant jail time for those allegedly responsible, without any explanation of the crimes that may have been committed. The aggressive use of the criminal laws to respond to perceived financial abuse probably had its birth in the prosecution of Michael Milken. Although folks will differ about the prosecution, there is no realistic dispute about the influence Mr MILKEN has had in creating the markets which made possible for new ideas and ventures to have access to the capital needed to build and thrive. . MILKEN effectively developed the so called "junk bonds" market which was the engine that allowed for this theoretically high risk capital to be effectively deployed. As the high yield market grew, Michael Milken and the firm he worked for, Drexel Burnham became the largest and most effective competitor in the market place. This led to a call for an investigation and coincided with a significant insider trading investigation centered on Ivan Boesky (fictionalized in the first Wall Street movie). The US Attorney in NY at the time was Rudolph Giulliani (later Mayor of NY and, more recently, know for his representation of President Trump in various matters including the Ukrainian matter) who led the investigation. Ultimately Mr MILKEN was indicted and pled guilty and was imprisoned. This seminar will involve an in depth study of the circumstances surrounding the high yield securities market and the investigation, indictment and guilty pleas and the subsequent impact of the case. The seminar will examine the tools available to prosecutors, including the use of the Racketeer Influenced and Corrupt Organizations Act (RICO) in white collar cases, in pursuing this and other cases, the affect of the media in high profile cases and other systemic elements that come into play. The seminar will feature presentations of many colorful key players including those involved in the prosecution and defense and those with knowledge of the high yield markets. The seminar will be taught jointly by Professor Mills (who was intimately involved with Mr MILKEN and defended some of the other cases which arose at the time) and Richard Sandler who served as Michael Milken's personal counsel throughout the time and has continued to work with Michael Milken to the present time. Elements used in grading: Class presentation and final paper.