Junk bond giant Michael Milken pleaded guilty Tuesday to six criminal charges and agreed to pay $600 million to settle the biggest Wall Street fraud case ever against an individual.
Milken, 43, entered his guilty plea at 12:42 p.m. before U.S. District Judge Kimba Wood in a courtroom packed with about 250 people in lower Manhattan."I realize by my acts I have hurt those who are closest to me. I am truly sorry," Milken said, breaking down and crying as he read a statement in court.
Included were guilty pleas for aiding speculator Ivan Boesky in several securities law violations; for aiding another trader in filing false income tax returns; and for conspiring to violate securities laws.
Milken did not plead to any charges of insider trading or racketeering, which were the most serious in the government's original, broad indictment of him.
The move capped the stunning decline of the former head of Drexel Burnham Lambert Inc.'s high-yield bond department. Milken gained notoriety for engineering financing for some of the biggest corporate takeovers of the 1980s and then for allegations of widespread wrongdoing.
Milken was the main target of the government's lengthy investigation of Wall Street crime that resulted in more than 30 convictions.
Milken was linked to a large insider trading network headed by Boesky, who paid $100 million and was sentenced to three years in prison in exchange for providing information against Milken, Drexel and others.
After three years of rumors and leaks, the Justice Department in March 1989 indicted Milken, his brother, Lowell, and former Drexel trader Bruce Newberg on an unprecedented 98 counts of fraud and racketeering.
Milken pleaded guilty to counts of conspiracy; aiding and abetting failure to meet federal securities disclosure regulations; securities fraud; aiding and abetting a regulated broker-dealer to violate securities reporting requirements; mail fraud; and assisting in filing a false tax return.
The first five counts carry a maximum five years each in prison and the tax count has a maximum three-year sentence, for a possible total of 28 years.
Milken agreed to pay $200 million in penalties to the government and $400 million to set up a fund for reimbursing investors defrauded by his actions.
"We believe that this prosecution and the fact that Mr. Milken has admitted to guilt will send the right message to the financial community," Assistant U.S. Attorney John K. Carroll told the court.