Michael Milken is going to jail; will the charity keep flowing? The arrival of the recession of 1990 was brought home to Americans late last month, when a New York Federal Court judge slapped an unprecedented 10-year jail sentence on Michael Milken, the one-time wunderkind of the money markets whose junk bonds fueled the takeover wars of the 80s.
The $ 600 million in fines and restitution Milken agreed to pay cut a chunk out of his personal fortune. But the Milken Foundation, with $ 350 million in assets, has assured Jewish and non-Jewish beneficiaries that its largesse will continue.
Milken's Israeli supporters are lavish in their praise. "I've never run into a man who has given such sums of money and not asked for all sorts of details and a written agreement," says Daniel Tropper, director of Gesher, which promotes dialogue between Orthodox and secular Jews in Israel.
The Milken Foundation, Tropper reports, contributed more than $ 1 million to construction of the Gesher Education Center, currently under way in in Jerusalem. Other Milken-funded projects in Israel include the Aliza Begin Wing, opened last year, at Assaf Harofeh Hospital outside Ramleh.
Milken's friends are legion, and fiercely loyal. U.S. District Court Judge Kimba Wooddiscovered that when she was deluged with pre-sentencing pleas for leniency, after Milken pleaded guilty to six of 98 felony counts, including fraud and conspiracy. Appeals came from a diverse group of people, including actor/producer Henry Winkler; former TV personality Monty Hall; Time-Warner chairman Steven J. Ross and Daryl Gates, the Los Angeles chief of police.
Milken is due to go to prison next March. Forbes magazine says that, in addition to his fine, he lost $ 250 million in the bankruptcy of Wall Street's Drexel Burnham Lambert, but is "believed to have $ 700 million left" in his personal fortune.
Nevertheless, Milken beneficiaries have cast a worried eye at the source of their funds. "I can't say that the members of my board were not concerned that a quarter of our budget would immediately dry up," admits Jay Sanderson, director of the Jewish Television Network in Los Angeles. "But I've never shared those fears. Mike Milken is a dependable man."
A slightly different picture of Milken emerges from an article published in The New Republic in August 1989. It suggests that Milken's support for a variety of Jewish causes, from community centers to television and publishing ventures, was aimed at softening the Encino, California native's public image. According to the article, Milken's philanthropy picked up speed after Wall Street speculator Ivan Boesky implicated him in serious securities law violations.
To bolster its contention, the New Republic article says that between 1982 and 1985, the Milken Foundation gave less than $ 1 million to charitable causes. In 1986, that amount increased to just over $ 2 million. And in 1987, as Boesky was telling all, the Milken Foundation paid out $ 11 million.
The figures, but not the argument, are contested by Joe Domanick, a Los Angeles-based freelance writer who has investigated Milken and his brother Lowell for New York's Manhattan Inc. magazine. Domanick says that the brothers contibuted $ 70 million to charitable causes in 1982-86. "Post-Boesky," he continues, "that figure jumped to $ 280 million."
Spokesmen at the Milken Foundation explain that the increase was a natural result of Milken's success; according to Fortune, his 1987 salary at Drexel Burnham was $ 550 million.
A family spokeswoman insists the causes Milken supported will not be abandoned. The family foundations "will continue to fund hundreds of organizations, as they have since 1982," she says. "Nothing has changed." Milken enters court for sentencing AP