• U.S.

Settlements: Reversal Of Fortune

2 minute read
TIME

Poor Michael Milken. He’s already paid $600 million in penalties and is 12 months into a 10-year prison sentence — and he still has to worry about hundreds of lawsuits filed by investors claiming they were bilked by his schemes. To settle those charges, the fallen junk-bond king has now agreed to pay $500 million more in a deal that requires the approval of U.S. Judge Milton Pollack in Manhattan. Plaintiffs include the Federal Deposit Insurance Corporation, which alleges Milken helped undermine the savings and loan industry by persuading S&L chairmen to load up on junk bonds that collapsed when the market for the risky IOUs turned sour.

Milken’s latest payment would be part of a $1.3 billion deal that calls for other former executives of the Drexel Burnham Lambert investment firm to contribute $300 million. The officers’ insurance firms would provide the remaining $100 million. At the same time, Pollack would decide how to distribute the funds among plaintiffs in the various legal actions.

Milken’s overall share of the settlement would come to a whopping $900 million, including $400 million in restitution that was part of his previous penalty. Not to worry: that still leaves the junkman with about $500 million of the wealth he amassed during the 1980s.

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