Junk bond financier Michael Milken was sentenced Wednesday to 10 years in prison for breaking federal securities and tax laws in the most celebrated case of financial corruption in Wall Street history.
Milken stood with his head down as U.S. District Judge Kimba Wood pronounced the stiffest sentence yet in the financial scandals that have gripped Wall Street since the mid-1980s.In addition, she sentenced him to three years' probation, plus full-time community service of 1,800 hours a year for an undetermined duration.
Milken, 44, faced a maximum of 28 years but Wood's sentence is far stiffer than many had predicted.
"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.
Wood said Milken's misuse of his leadership position constituted "serious crimes warranting serious punishment and the discomfort of being removed from society."
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.
The judge said she considered evidence of additional crimes, including obstruction of justice by Milken, in handing down the sentence.
He was ordered to surrender to U.S. marshals March 4, 1991. No federal prison was designated. The sentence capped the long, tumultuous saga of the former Drexel Burnham Lambert Inc. executive who was first implicated in an aggressive government insider trading investigation by speculator Ivan Boesky in 1986.
Milken, of Encino, Calif., personally made more than $1 billion through a junk bond empire that altered U.S. corporate finance in the '80s.
He sobbed at various times during the 90-minute proceeding in Manhattan federal court. 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."
He must serve at least one-third of his prison term before he's eligible for parole, which means he couldn't be released until March 1994.
Milken pleaded guilty in April to six counts of conspiracy and fraud related to illegal securities trading after denying a much broader array of accusations. None of the charges involved insider trading or junk bonds, the risky debt securities Milken turned into a tool for capital raising and corporate takeovers.
As part of his plea bargain, Milken also agreed to pay $600 million in fines and restitution to defrauded investors, the largest penalty against an individual in U.S. history.
The Wall Street fraud probe revealed pockets of corruption at top firms during major investment deals and resulted in about 50 indictments.
Boesky, by comparison, was sentenced to three years in prison and penalized $100 million after pleading guilty to one criminal count of lying to federal regulators. He served 18 months in prison.
Before he was sentenced, Milken wrote an 11-page letter to Wood apologizing for his crimes and asking for a chance to rebuild his life by performing community service.
"I never dreamed I could do anything that would result in being a felon. But I did break the law. I was wrong, and no matter how sorry I am I have to accept that fact."