Former junk bond king Michael Milken -- a 1979 Wharton graduate -- was sentenced last Wednesday morning to 10 years in prison for breaking federal securities and tax laws in one of the best-known cases of financial corruption in Wall Street history. Milken, who received his MBA from Wharton, faced up to 28 years for the offenses. He was indicted by a grand jury on 98 securities violations in the spring of 1989 but reached a plea bargain in April convicting him of just six crimes. Milken, 44, sobbed at points during the sentencing and stood with his head down as U.S. District Judge Kimba Wood pronounced the stiffest punishment yet in the fraud scandals that have gripped Wall Street since the mid-1980s. In addition, she sentenced him to three years' probation during which he must work 1800 hours a year in community service. He must serve at least one-third of his prison term before he can be considered for release. Milken, a former executive for the now-bankrupt Drexel Burnham Lambert, has donated millions of dollars to the University since his graduation, including a $2 million grant to help West Philadelphia community service projects. His portrait, which hung in the Wharton "Hall of Fame," was removed last May, one month after Milken reached the plea bargain with prosecutors. "I believe that a prison term is required for the purposes of general deterrence," Wood told a court crammed with 200 spectators, including many of Milken's friends and supporters. She said Milken was a man of ''talent and industry'' but that a long prison term was required to send a message to other possible securities-law violators. He was ordered to begin his sentence March 4, 1991. No federal prison was designated. The sentence capped the long, tumultuous saga of the Encino, California resident, who was first implicated in an aggressive government insider trading investigation by speculator Ivan Boesky in 1986. Sobbing at times during the 90-minute hearing, he told the judge: "What I did violated not just the law but all of my principles and values and I will regret it for the rest of my life. I am truly sorry." Before Wood issued the sentence, Milken's attorney Arthur Liman asked her to consider the financier's more than $360 million in charitable contributions and other acts of generosity. ''He will never repeat his mistakes. He is a changed person,'' Liman said. Assistant U.S. Attorney Jess Fardella countered that ''despite his talents and opportunities, Mr. Milken sought to multiply his success through the vehicle of fraud.'' Wood delayed sentencing, originally scheduled for October 1, for a hearing into government charges of additional crimes beyond Milken's guilty plea. Prosecutors revealed that Drexel paid Milken a total of $1.1 billion from 1984 to 1987, including $550 million the final year. That $550 million paycheck put him in the Guinness Book of World Records. Regulators have pinned much of the blame for the savings and loan crisis on Drexel, accusing it of plundering S&Ls; through its junk bond practices. The Associated Press contributed to this story.Comments powered by Disqus
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