UCLA Law launches the Lowell Milken Center for Philanthropy and Nonprofits - Daily Bruin

By Amy Wong

Feb. 15, 2024 dailybruin.com

From <https://dailybruin.com/2024/02/15/ucla-law-launches-the-lowell-milken-center-for-philanthropy-and-nonprofits>

UCLA community members said a new research center at the School of Law provides opportunities for leadership and scholarship related to nonprofit law and philanthropic efforts.

The law school established the Program on Philanthropy and Nonprofits in 2021, which has now transformed into the Lowell Milken Center for Philanthropy and Nonprofits after Milken, the founding donor of the center, gave an additional $8.05 million for its creation.

“What motivated me is the rather unique moment in history that’s taking place as my generation, the baby boomers, pass on the amount of wealth that they left to foundations,” Milken said. “(This) is something we’ve never seen in our nation before.”

Because of the recent donations Milken made, the law school can focus on serving the students in the nonprofit sector instead of spending time fundraising, said Jill Horwitz, faculty director of the Lowell Milken Center.

Joel Feuer, executive director of the Lowell Milken Institute for Business Law and Policy who worked on the program, said he thought members of the law school could provide useful information to nonprofit and philanthropic communities.

“Lawyers have a lot of information and insight into these areas,” Feuer said. “I also felt that it (the nonprofit sector) was probably underserved by both law schools and other institutions.”

The nonprofit sector is an important part of culture, economy and civic expression, making the new center important, Horwitz said.

Rose Chan Loui, the executive director of the Lowell Milken Center, said she anticipates the center working in the three main areas of education, scholarship and thought leadership.

The new research center will also introduce law students to nonprofit law, a field many do not know exists, Horwitz said.

“Many people say that they want to work in a substantive area like environment, or civil rights or healthcare,” Horwitz said. “But a lot of lawyers end up working in those areas, … (and) part of what they’re doing is acting as an expert on nonprofit governance and organization law. We hope to offer them opportunities to train in those areas.”

Feuer said the center will educate law students about what nonprofits do and how nonprofit board members think about things, which he believes will be valuable.

Loui said in addition to education, the center can help practitioners through thought leadership.

“It’s also really important to me that in the present, we are there as a resource for the nonprofits and philanthropies that are working in our world today,” Loui said. “We definitely want to be educating the next generation of philanthropic and nonprofit advisors, but I think we can do that work now.”

As a research center, it can also contribute to current scholarship, Loui said. She added that this can be accomplished by looking at how the impact and effectiveness of the nonprofit sector can be improved, and by writing articles about how laws can be changed or interpreted.

Ellen Aprill, a senior scholar in residence at the center, said there are specific ways scholarship can influence decision-making, including through influencing tax policy.

“I do at times try to persuade the IRS and Treasury (Department) to adopt certain rules, and not to adopt (others),” Aprill said. “Research as to what the IRS and Treasury, in fact, do, can be useful to nonprofit practitioners of all kinds, whether they (are) lawyers, accountants or people inside nonprofits.”

The center is well-positioned to become an active and robust institution through its research and by hosting events, Feuer said.

On Feb. 29 and March 1, the center will host the 27th Annual Western Conference on Tax-Exempt Organizations, which will cover topics such as whether nonprofits can save journalism, and takeaways from recent Supreme Court decisions.

The conferences held at the center bring people interested in studying and learning about issues in the nonprofit sector from all over the country, Horwitz said, adding that she looks forward to collaborating with others.

“My research is at the border of law and policy, and so being able to convene in a space where we bring in practitioners and regulators and scholars to work together, that’s the stuff that makes my heart sing,” Horwitz said. “The center is giving me the space to do that.”

https://dailybruin.com/2024/02/15/ucla-law-launches-the-lowell-milken-center-for-philanthropy-and-nonprofits

UCLA Law philanthropy program receives $8 million from Lowell Milken

January 16, 2024

The UCLA School of Law (UCLA Law) has announced an $8.05 million gift from alumnus Lowell Milken (JD ’73) in support of a research center that will study philanthropy and nonprofit law.

The Lowell Milken Center for Philanthropy and Nonprofits aims to brings together scholars, practitioners, nonprofit and philanthropic leaders, and policy makers to research this area of law and educate students and experts in the discipline. The center will absorb the school’s current philanthropy and nonprofits program, established in 2021 with a $3.7 million gift from Milken.

UCLA Law has named Rose Chan Loui, an expert in federal income tax and the law governing nonprofit organizations, as executive director and Jill Horwitz, UCLA’s David Sanders Professor in Law and Medicine, as the center’s faculty director.

“With [this] support, UCLA Law’s new Center for Philanthropy and Nonprofits is well situated to transform the field by training the next generation of nonprofit lawyers, developing scholarship and bringing together the nonprofit sector’s many stakeholders for events and courses in tax law, governance, [and] compliance,” said UCLA Law dean Michael Waterstone.

“We are at a unique moment in history, where members of the baby boomer generation have accumulated unprecedented wealth. That wealth is spurring revolutionary change in philanthropy and giving,” said Milken. “Ultimately, this generational wealth shift and the infusion of financial capital into the philanthropic community have the potential to create a profoundly positive impact on society. With its strong leadership in Jill and Rose, UCLA Law can ensure this impact by training the next generation of nonprofit leaders and advisors.”

(Photo credit: Wikimedia/Coolcaesar)

 "UCLA Law launches center to address ‘revolutionary change’ in philanthropy and nonprofits." UCLA School of Law press release 01/11/2024.

From <https://philanthropynewsdigest.org/news/ucla-law-philanthropy-program-receives-8-million-from-lowell-milken>

2020Dec03 Press Release | Announcing the Lowell Milken Center for Music of American Jewish Experience at UCLA

Housed in the UCLA Herb Alpert School of Music, the new Lowell Milken Center for Music of American Jewish Experience will foster artistic creativity, scholarship, performance and other cultural expression, thanks to a $6.75 million gift from the Lowell Milken Family Foundation.

“The Lowell Milken Center for Music of American Jewish Experience will unite the academic and the artistic, showcasing the artists, scholars and educators who reveal to us the authentic voice of our shared humanity and the inexhaustible call toward our noblest self,” said Eileen Strempel, dean of the school of music.

“We are incredibly grateful to Lowell Milken for his generous gift to endow this center, which builds on our latest learnings, establishes a standard of excellence and an enduring infrastructure at UCLA for music of American Jewish experience, and gives us the ability to plan more ambitious initiatives for years to come.”

The new center is a natural extension of the Milken Archive of Jewish Music, which was founded by Milken in 1990 to record, preserve and disseminate music inspired by more than 350 years of Jewish life in the United States.

“From the outset, our vision was to create a living archive making education central to our mission. The partnership with the UCLA Herb Alpert School of Music positions the new center as a global leader in the field of music of American Jewish experience,” Milken said.

The Lowell Milken Center also builds on the Lowell Milken Fund for American Jewish Music at UCLA. That fund’s establishment, in 2017, enabled the school of music to begin its collaboration with the Milken Archive and build a track record that opened the door to the more expansive center. The fund has produced a diverse calendar of concerts, lectures and projects, ranging from klezmer workshops to large choral and orchestral performances to artist residencies and commissions of new music.

Its inaugural program, “American Culture and the Jewish Experience in Music,” featured the world premiere of the oratorio “David’s Quilt,” along with programs in conjunction with the UCLA Alan D. Leve Center for Jewish Studies.

The fund also produced the UCLA American Jewish Music Festival in March, which culminated in the “Titans of Jewish Music” concert in Royce Hall with performances by various UCLA ensembles. Additionally, a partnership with the national Cantors Assembly enabled UCLA to launch an adult education curriculum designed to engage participants in music of North American Jewish experience.

From <https://www.lowellmilken.org/press-releases/announcing-the-lowell-milken-center-for-music-of-american-jewish-experience-at-ucla>

UCLA and Milken Archive launch

Lowell Milken Center for Music of American Jewish Experience

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The Lowell Milken Center is currently producing videos on subjects including the story of “David’s Quilt,” a concert work by 15 composers of different backgrounds and styles, and insights on the scope of music showcased in the UCLA American Jewish Music Festival. [Insert details on videos and where to view them once finalized.] Once public health conditions allow, the center also plans to hold a concert to celebrate its opening.

“Over the past three years, Lowell Milken has enabled our exploration of the intricate ways in which music reflects and shapes the diverse American Jewish experience,” said Mark Kligman, UCLA’s Mickey Katz Professor of Jewish Music, who will direct the new center. “The Lowell Milken Center for Music of American Jewish Experience will expand these efforts at UCLA and into the community, and will enhance the field of American Jewish music on an international scale.”

A graduate of UCLA School of Law, Milken is an international businessman and philanthropist who chairs National Realty Trust, the largest property owner of early childhood centers in the U.S., and London-based Heron International, a worldwide leader in property development. Known for his philanthropy in education, music and design, he has long supported UCLA and previously gave to establish the Lowell Milken Institute for Business Law and Policy at UCLA School of Law and the Lowell Milken Family Centennial Scholars Endowed Scholarship Fund for student-athletes.

Milken received an honorary doctorate from Hebrew Union College, and his work through the Milken Archive to preserve Jewish heritage and culture was recognized by the Jewish Theological Seminary on the 65th anniversary of Kristallnacht.

Since 1990, the Milken Archive has engaged an international roster of artists, composers and experts of different faiths and disciplines to share sacred and secular music, much of which was undiscovered or in danger of being lost. Engaging an equally global audience, the Milken Archive has completed more than 600 recordings, 200 oral histories and a series of 50 award-winning albums on the Naxos American Classics label.

From <https://www.lowellmilken.org/press-releases/announcing-the-lowell-milken-center-for-music-of-american-jewish-experience-at-ucla>

UCLA Receives $1.5 Million from Lowell Milken Family Foundation To Advance American Jewish Music

Gift is largest donation made to a university to support Jewish music research and performance

April 6, 2017

SANTA MONICA, CA — The UCLA Herb Alpert School of Music has received a $1.5 million gift from the Lowell Milken Family Foundation to establish the Lowell Milken Fund for American Jewish Music. The fund will enable the school to build on the work of the Milken Archive of Jewish Music, a collection of recordings, scores and historical materials that document the Jewish experience in America over the past 350 years.

The Milken Archive of Jewish Music was founded in 1990 by Lowell Milken with a vision to record, preserve and disseminate the music born of and inspired by Jewish life in America. It has grown to include more than 600 recordings by 200 composers, complemented by more than 800 hours of oral history recordings, videos, photographs and scholarship. Deemed "the most comprehensive documentation, ever, of music reflecting Jewish life and culture in America"by the Chicago Tribune, the Santa Monica-based archive has earned ASCAP and Grammy awards.

Now, as an academic partner to the archive, the Herb Alpert School of Music will use the fund to advance and advocate for the field of American Jewish music by contributing to research, scholarship and programs in the field at the undergraduate, graduate and faculty levels, while presenting concerts and symposia to engage and educate the community.

"Our goal is to advance cutting-edge research, artistic creativity and interdisciplinary collaboration,"Milken said. "The Milken Archive is a living project, and I believe the UCLA Herb Alpert School of Music is uniquely positioned to further both our mission and our impact on current and future generations."

The newly appointed academic director of the fund is Mark Kligman, who holds the school's Mickey Katz Endowed Chair in Jewish Music.

"There has never been a concerted effort to significantly research or study American Jewish music,"Kligman said. "With the establishment of this fund, Jewish music—and its history and development—will be given the attention it deserves as an integral part of the American music experience."

The fund's inaugural program, American Culture and the Jewish Experience in Music, will be held in November. The three-day conference, which will be co-presented with the UCLA Alan D. Leve Center for Jewish Studies, will focus on the long-term continuities that American flexibility and enterprise have made available to Jewish performers, composers, cantors, collectors and thinkers. It will feature performances of new compositions, panel discussions and lectures on heritage, innovation and interactivity.

"This gift substantially advances our commitment to the field of Jewish music,"said Judith Smith, dean of the music school. "Bringing together academic scholarship with performances and community events, the gift embraces and leverages the unique advantages of the school's three departments: ethnomusicology, music and musicology."

Milken graduated from the UCLA School of Law in 1973 and is among UCLA's most generous supporters. His many contributions to UCLA over the past quarter-century include a transformative $10 million gift in 2011 to the law school, which established the Lowell Milken Institute for Business Law and Policy. The largest single gift in the law school's history, it enabled the school to surpass a $100 million fundraising goal well ahead of the original five-year schedule. The donation was followed by another $5 million gift in 2014.

In 2016, UCLA was honored again when Milken donated $1 million for the Lowell Milken Family Centennial Scholars Endowed Scholarship Fund, which provides substantive support to some of the campus's nearly 700 student-athletes as they pursue their degrees. The gifts have been part of the $4.2 billion UCLA Centennial Campaign, which is scheduled to conclude in December 2019 during UCLA's 100th anniversary year.

About the Milken Archive of Jewish Music

Founded in 1990 by philanthropist Lowell Milken, the Milken Archive of Jewish Music reflects the scope and variety of Jewish life in America. The Archive's virtual museum http://www.milkenarchive.org is an interactive guide to music, videos, oral histories, photos and essays.

Connect with us on Facebook at www.facebook.com/MilkenArchive and on Twitter at www.twitter.com/milkenarchive.  

Bonnie Somers

(310) 570-4770 (office)

(818) 307-3111 (cell)

bsomers@mff.org

From <https://www.mff.org/newsroom/press-releases/view/ucla-receives-1-5-million-from-lowell-milken-family-foundation-to>

UCLA School of Law Receives Transformative $10 Million Gift

The gift, the largest in the school's history, establishes the Lowell Milken Institute for Business Law and Policy and serves as the capstone of the school's $100 million endowment campaign.

LOS ANGELES, CA, August 9, 2011—UCLA School of Law has received a transformative $10 million gift—the largest single gift in the school’s history—enabling the law school to meet and exceed its ambitious $100 million fundraising goal, well ahead of its original five-year schedule. The Campaign for UCLA School of Law was launched publicly in 2008 to increase private resources for student scholarships, to attract and retain faculty and to support centers and institutes that inform law and public policy.

The $10 million gift from 2009 Public Service Alumnus of the Year Lowell Milken ’73, a leading philanthropist and pioneer in education reform, establishes the Lowell Milken Institute for Business Law and Policy. The Institute’s creation culminates a three-year process of exploration initiated by leadership at UCLA Law with Lowell Milken to develop initiatives in business and law to serve students, faculty and the greater community through innovative research, hands-on skills training, as well as real-world problem-solving.

UCLA School of Law Dean Rachel F. Moran noted that the Lowell Milken Institute will draw on the school’s existing strengths in business law and policy, including its premier faculty and outstanding students, in addition to its long tradition of interdisciplinary collaborations. “In line with the goals of the Campaign for UCLA Law, Lowell’s generosity will enable us to initiate a range of curricular innovations, further critical research and provide financial support for students, who will become our nation’s future leaders in business law and policy,” Moran said. An expanded curriculum and enhanced training in real-world transactional skills will aid not only students but the broader legal and business communities, she added.

The $10 million gift serves as the capstone of the law school’s record-breaking $100 million campaign which, along with the Lowell Milken Institute for Business Law and Policy, led to the creation of the David J. Epstein Program in Public Interest Law and Policy, the Emmett Center on Climate Change and the Environment, the Williams Institute on Sexual Orientation Law and Public Policy (which had previously been a program), the Michael T. Masin Scholars Fund and the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. In addition, the campaign funded the school’s A. Barry Cappello Courtroom, the Bruce H. Spector Conference Room and the Bernard A. and Lenore S. Greenberg Endowed Law Review Fellow Fund.

According to Dean Moran, private philanthropy throughout the campaign more than doubled the number of endowed chairs at UCLA School of Law, including four chairs endowed by long-time supports Ralph ’58 and Shirley Shapiro, and UCLA School of Law had the highest rate of growth in alumni giving of any top 20 law school, as participation rates soared to more than 30%. Key to this success was the Law Firm Challenge, which broke new records every year under the leadership of its Founding Chair James D. C. Barrall ’75, as well as the recently created Reunion Challenge.

“As our record growth in giving demonstrates, our alumni have rallied together in unprecedented numbers under the leadership of Campaign Chairman Ken Ziffren ’65 and a team of dedicated volunteer leaders. They’ve demonstrated their commitment to UCLA School of Law’s longstanding traditions of excellence, innovation, access and service. This critical campaign and the transformative gift from Lowell Milken show that our students, alumni, and friends share the vision and values that define us as a great public law school, and their ongoing support will help us to overcome the often dour predictions prompted by the state and national budget crisis.”

Private philanthropy is vital to preserving the longstanding tradition of serving the community and the greater good, a commitment integral to the mission of both the law school and the UCLA campus. “This generous gift will deepen UCLA Law’s already strong impact on the vibrant Los Angeles legal and business communities and help prepare students with the training they need to meet the challenges of today’s global and entrepreneurial economy,” said UCLA Chancellor Gene Block. “Through groundbreaking research, as well as symposia and conferences, the Lowell Milken Institute will facilitate the kind of sustained dialogue with policymakers and practitioners that is UCLA’s hallmark as a public university.”

Alumni and philanthropists increasingly are recognizing this imperative. “At a time when our state’s great universities are under significant financial pressure and constraints, it is incumbent upon those of us who benefitted greatly from our educational experiences within the UC system to help support the outstanding work of these universities,” said Milken, who graduated Phi Beta Kappa and summa cum laude from the University of California, Berkeley, where he received the School of Business Administration’s Most Outstanding Student award. At UCLA School of Law, he earned his degree with the distinction of Order of the Coif and UCLA Law Review.

As chairman and co-founder of the Milken Family Foundation, Lowell Milken’s dedication to education reform has been informed by more than three decades of education research, policy and practice, as well as firsthand visits to thousands of classrooms. Milken created the Milken Educator Awards in 1985, the nation's most prominent teacher-recognition program. In 1999, he founded TAP™: The System for Teacher and Student Advancement, a proven, comprehensive school reform now active in 13 states to attract, develop, motivate and retain the best talent to the American teaching profession. He also was instrumental in the establishment of High Tech Los Angeles, a public charter high school that engages students through self-directed learning, collaborative projects and real-world internships.

An international businessman, Lowell Milken is co-founder of Knowledge Universe, the world’s largest early childhood education company. Headquartered in Singapore, Knowledge Universe operates worldwide with more than 38,000 employees. Milken is also chairman of London-based Heron International, a world-wide leader in property development.

About UCLA School of Law and the Campaign

Founded in 1949, UCLA School of Law is the youngest major law school in the nation and has established a tradition of innovation in its approach to teaching, research and scholarship. With approximately 100 faculty and 970 students, the school pioneered clinical teaching, is a leader in interdisciplinary research and training, and is at the forefront of efforts to link research to its effects on society and the legal profession.

In April 2008, UCLA School of Law publicly launched the $100 million Campaign for UCLA School of Law — the largest fundraising effort in the school's history — to increase funding for student scholarships and to attract and retain a world-class faculty. In addition, the campaign also seeks funding to expand academic courses and support law school clinics, centers and programs that inform law and public policy.

For more information, visit www.law.ucla.edu.

From <https://www.lowellmilken.org/press-releases/ucla-school-of-law-receives-transformative-10-million-gift>

2011aug22 NYT Milken’s Gift Stirs Dispute at U.C.L.A. Law School

By Julie Creswell and Peter Lattman August 22, 2011 8:34 pm August 22, 2011 8:34 pm

Milken Family FoundationLowell Milken helped create the booming junk bond market of the 1980s.

When the U.C.L.A. School of Law announced a $10 million gift from Lowell Milken to establish a business law institute in his name earlier this month, the university described him as a “pioneer in education reform” and a “leading philanthropist.”

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. While many faculty members welcomed the money, one of the University of California, Los Angeles’s top business law professors has said the gift poses deep ethical problems and reputational risks, given Mr. Milken’s run-in with securities regulators two decades ago.

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

Ms. Stout, a specialist in corporate governance and moral behavior, said in an interview last week, “I think it’s somewhat distressing that so few people seem to be aware of Lowell and Michael Milken’s business history.”

The Milken name is still a lightning rod on Wall Street and in legal circles. Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

As part of a settlement in a related civil matter, the Securities and Exchange Commission permanently barred the two brothers from the securities industry.

Lowell Milken did not admit to any wrongdoing.

Kenneth W. Graham Jr., a retired U.C.L.A. law professor, said it was a mistake to take the gift from Mr. Milken, a 1973 graduate of the school and longtime donor to it. “To say that I was outraged would be something of an understatement,” wrote Mr. Graham in an e-mail.

But other U.C.L.A. law professors disagree with the objections and are thrilled with Mr. Milken’s largess. Since their legal woes, the Milken brothers have become prominent philanthropists, donating hundreds of millions of dollars to a variety of causes, most notably in the areas of medical research and education.

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said.

The current debate surrounding Lowell Milken’s gift highlights the quandary that public universities across the country face as the fiscal woes of states have forced them to look increasingly to private corporations and wealthy alumni for financial support. Law schools are typically among a state school’s most profitable graduate programs.

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education,” said Stephen Bainbridge, a U.C.L.A. corporate law professor. “If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.”

When asked to respond to complaints about Mr. Milken’s gift, Bonnie Somers, a spokeswoman for the Milken Family Foundation, issued a written statement.

“Basic fairness requires that individuals be evaluated solely on the basis of their own conduct and Lowell Milken’s life of accomplishment and service speaks for itself,” her statement said. She added that the foundation respected the fact that U.C.L.A. “understands that in the United States of America, its citizens are presumed innocent until proven otherwise.”

Lauri Gavel, a law school spokeswoman, also issued a written statement: “Only one member of the business law faculty has expressed anything less than gratitude — and that concern was surprising, given that this professor was involved early in the process, has been a beneficiary of the donor’s philanthropy, and did not raise objections until quite recently.”

This is not the first time a Milken has generated controversy at U.C.L.A. In 1994, the university severed its ties with an education company controlled by Michael R. Milken that planned to sell videotapes of a lecture series he gave at the school. The company agreed to remove any identification of U.C.L.A. from the tapes after the school said it received many complaints from state officials who did not want the university’s name associated with Mr. Milken.

While Lowell Milken’s gift was the capstone of the law school’s $100 million fund-raising campaign, several other benefactors made donations and in return had buildings, conference rooms, professorships and scholarship funds named in their honor.

Mr. Milken is not the only leading donor in the current campaign that has tussled with regulatory authorities. The capital drive also led to the creation of the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. The Resnicks are the Beverly Hills beverage industry entrepreneurs who own Fiji Water and Pom Wonderful.

Last fall, the Federal Trade Commission filed a civil lawsuit against the Resnicks, accusing them and their company, Pom Wonderful, of making “false and unsubstantiated claims” that their pomegranate juice product helped reduce the risk of heart disease and erectile dysfunction.

Jill Gottesman, a spokeswoman for Pom Wonderful and the Resnicks, which are fighting the charges, has called the government’s allegations “completely unwarranted.”

Law professors unaffiliated with U.C.L.A. say that even though the economic environment makes it challenging for public schools to finance vital programs, they need to consider the potential risks in accepting private money. Thane Rosenbaum, a law professor at Fordham University, said that U.C.L.A.’s gifts from Mr. Milken and the Resnicks reflect a kind of “academic cynicism.”

“Here is a major law school, with state funding in California deteriorating, now taking its money from people engaged in questionable behavior,” said Mr. Rosenbaum. “It’s unbecoming to a great university.”

Other schools have in the past refused money, or taken other actions, when their benefactors have become involved in corporate wrongdoing. In the 1980s, Princeton returned money from Ivan Boesky to build a Jewish Center after the government charged the Wall Street financier with insider trading crimes. Seton Hall removed the name of L. Dennis Kozlowski from an academic building in 2005, after the conviction of the former Tyco chief executive for looting his company.

Inside the halls of U.C.L.A., the protests of Ms. Stout, a tenured professor whose most recent book is “Cultivating Conscience: How Good Laws Make Good People,” has caused consternation among her colleagues.

Mr. Bainbridge, the corporate law professor, said that though he considered Ms. Stout a friend, he disagreed with her position.

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person,” said Mr. Bainbridge.

“I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

From <https://archive.nytimes.com/dealbook.nytimes.com/2011/08/22/milkens-gift-provokes-dispute-at-u-c-l-a-law-school/>

Should UCLA Law School Accept Milken's Millions?

Ah, California. Your weather is amazing, but we don't want to deal with your earthquakes. Over at UCLA Law School, they're experiencing some earth-shaking controversy of their own. An ultra-wealthy alumnus made it rain, with a $10 million gift to the school -- but now some professors want to rain on his parade, and their objections have hit the national news media....

By David Lat   Blog abovethelaw

August 23, 2011 at 6:13 PM

Ah, California. Your weather is amazing, but I don’t think I could deal with your earthquakes. The tremor we just experienced here on the East Coast has turned me into a nervous wreck.

Over at UCLA Law School, they’re experiencing some earth-shaking controversy of their own. An ultra-wealthy alumnus made it rain, with a $10 million gift to the school — but now some professors want to rain on his parade, and their objections have hit the national news media. (Apologies for the mixed precipitation metaphors.)

As we mentioned last week, UCLA law alumnus Lowell Milken made a $10 million gift to his alma mater — the largest single donation in the law school’s history. The money will be used to establish the Lowell Milken Institute for Business and Law.

Milken, Milken — that last name sounds familiar….

Yes, that’s right — Lowell Milken is the brother of that Milken, infamous white-collar criminal Michael Milken, former junk bond king and poster boy for 1980s Wall Street excess. The brothers’ connection is causing controversy, as reported by Julie Cresswell and Peter Lattman in the New York Times:

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. While many faculty members welcomed the money, one of the University of California, Los Angeles’s top business law professors has said the gift poses deep ethical problems and reputational risks, given Mr. Milken’s run-in with securities regulators two decades ago.

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

With all due respect, Professor Stout, you are the Paul Hastings Distinguished Professor of Corporate and Securities Law. Paul Hastings is one of the country’s finest firms, but even it has had its share of less-than-distinguished moments.

Back to the Milken controversy. For those of you not old enough to remember the eighties (well, at least the non-Madonna parts):

The Milken name is still a lightning rod on Wall Street and in legal circles. Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

As part of a settlement in a related civil matter, the Securities and Exchange Commission permanently barred the two brothers from the securities industry. Lowell Milken did not admit to any wrongdoing.

That last part is worth noting. Even though Michael Milken went to prison, Lowell Milken — the person actually making the $10 million gift — was never convicted of anything. As Bonnie Somers, a spokeswoman for the Milken Family Foundation, told the Times, “Basic fairness requires that individuals be evaluated solely on the basis of their own conduct, and Lowell Milken’s life of accomplishment and service speaks for itself…. [To its credit, UCLA] understands that in the United States of America, its citizens are presumed innocent until proven otherwise.”

Shouldn’t that settle matters? Not as far as Professor Stout is concerned — and she’s not alone. A retired UCLA law professor, Kenneth W. Graham Jr., described himself as “outraged” over the gift. It could be argued — and presumably this is the basis for the objections — that even if Lowell wasn’t convicted, perhaps thanks to his brother’s willingness to take the fall, some of the Milken millions should be seen as ill-gotten gains. As a Fordham law professor, Thane Rosenbaum, told the Times, UCLA is essentially “taking its money from people engaged in questionable behavior…. It’s unbecoming to a great university.”

In this economy, though, should law schools be looking gift horses in the mouth? The objectors appear to be in the minority, at least at UCLA Law:

[O]ther U.C.L.A. law professors disagree with the objections and are thrilled with Mr. Milken’s largess. Since their legal woes, the Milken brothers have become prominent philanthropists, donating hundreds of millions of dollars to a variety of causes, most notably in the areas of medical research and education.

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said.

The current debate surrounding Lowell Milken’s gift highlights the quandary that public universities across the country face as the fiscal woes of states have forced them to look increasingly to private corporations and wealthy alumni for financial support.

Indeed. The University of California system has suffered greatly during the Great Recession and its aftermath. As you may recall, the UC Regents recently hiked student fees for the coming academic year. To its credit, UCLA Law essentially neutralized that increase, by issuing immediate scholarships to the entire student body, in the exact amount of the hike.

But that money ultimately has to come from somewhere, right? What’s wrong with milkin’ a Milken?

That seems to be the pragmatic view of Professor Stephen Bainbridge, who made the following comments to the Times:

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education. If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.”

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person. I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

Over at his blog, Professor Bainbridge offers additional analysis of the Milken gift, focusing on the underlying events from the 1980s. He emphasizes that Lowell Milken was never convicted of anything and that “the government used threats to go after Lowell as one of the ways on which they coerced Michael into taking a plea deal.” Read the full post over here.

Readers, what do you think? Take our reader poll below, and share your views in the comments.

P.S. We realize that we’ve been running a lot of reader polls around here lately — see, e.g., here (what caused the earthquake), here (views of “ScamProf”), and here (“all right” versus “alright”) — but that’s part of the fun of running an interactive website. It’s neat to tee up an issue and get an immediate read on public opinion. Reading comments can serve that purpose too, but as we often tell people, commenters are not a representative sampling of our entire readership.

Should UCLA Law School accept Lowell Milken's $10 million gift?

• Yes - it's all about the benjamins, baby.

• No - that's tainted money.

From <https://abovethelaw.com/2011/08/should-ucla-law-school-accept-milkens-millions/>

professor bainbridge comments RE NY Times on the Milken gift to UCLA Law

The NY Times reports that:

When the U.C.L.A. School of Law announced a $10 million gift from Lowell Milken to establish a business law institute in his name earlier this month, the university described him as a “pioneer in education reform” and a “leading philanthropist.”

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. ...

Wrong. There is no debate. Only one active member of the faculty is complaining:

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

Despite the Times' implication that there's some sort of debate roiling the halls, the truth is that everybody else is supportive of and appreciative of the gift:

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said. ...

Lauri Gavel, a law school spokeswoman, also issued a written statement: “Only one member of the business law faculty has expressed anything less than gratitude — and that concern was surprising, given that this professor was involved early in the process, has been a beneficiary of the donor’s philanthropy, and did not raise objections until quite recently.”

Oddly, the Times reporters decided to also drag another gift to the law school--one wholly unrelated to the Milken gift--into the alleged debate:

The capital drive also led to the creation of the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. The Resnicks are the Beverly Hills beverage industry entrepreneurs who own Fiji Water and Pom Wonderful.

Last fall, the Federal Trade Commission filed a civil lawsuit against the Resnicks, accusing them and their company, Pom Wonderful, of making “false and unsubstantiated claims” that their pomegranate juice product helped reduce the risk of heart disease and erectile dysfunction.

Jill Gottesman, a spokeswoman for Pom Wonderful and the Resnicks, which are fighting the charges, has called the government’s allegations “completely unwarranted.”

Is the implication that unproven charges are supposed to have the law school blacklist a donor? I don't think so, but maybe the Times thinks (a) the donor is guilty until proven innocent and therefore (b) the law school is guilty by association.

The Times story points to several occasions on which universities have given back gifts:

In the 1980s, Princeton returned money from Ivan Boesky to build a Jewish Center after the government charged the Wall Street financier with insider trading crimes. Seton Hall removed the name of L. Dennis Kozlowski from an academic building in 2005, after the conviction of the former Tyco chief executive for looting his company.

But those cases aren't on point. Boesky and Kozlowski were convicted of crimes. Lowell Milken was never charged with a crime. To be sure, the Times tries to spin that as a problem:

Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

Some of us who were active in the field at the time--as I was--remember the story a bit differently. In our view, the government used threats to go after Lowell as one of the ways on which they coerced Michael into taking a plea deal.

As for the Milkens and their time at Drexel, Daniel Fischel's book Payback: The Conspiracy to Destroy Michael Milken and His Financial Revolution is sadly out of print but can be acquired as a used book and provides a useful contrarian account of the period. As Christopher Faille summarized Fischel's argument in a review (42-DEC FEDRLAW 45):

In the 1980s, the government frequently prosecuted individuals for insider trading even though they had come by market-useful information through no such underhanded means, but rather by inference from publicly accessible sources, diligently studied. On dubious statutory authority, the government began to contend that the simple possession of information, not generally available to those members of the investing public without an opportunity for diligent study, can render a trader a tainted “insider.” This taint, in turn, renders any exchange in the stock of a takeover-targeted firm a crime. It was against criminals of that alleged stripe that Rudolph Guiliani -- then U.S. Attorney for the Southern District of New York, now the mayor of New York City -- waged his high-profile holy war, which Fischel calls a “Reign of Terror.” It was pursuant to that, that he “got” Michael Milken. ...

It is not any sympathy for [Michael] Milken that should motivate a reaction against Giuliani's terror. Milken, after all, seems to have survived his imprisonment rather well, and (in a development too recent for inclusion in Fischel's book) has received a large consulting fee from Ted Turner for his part in negotiations between that communications magnate and the executives at Time-Warner. What ought to motivate a reaction is that the government of the United States has thrown the sporadic and unpredictable exercise of its coercive powers into the thick of boardroom conflicts, and has done so precisely in order to protect the grave inefficiencies that exist at the heart of our system of production. It has done so by criminalizing precisely the sort of trading that most threatens such inefficiency: trading by or in support of suitors in a takeover bid.

This is not to fully endorse Fischel's account. As Tom Smith has observed (22 Law & Soc. Inquiry 1041):

Fischel fails to persuade me of [Michael] Milken's innocence. ...

I complain above about Fischel's lack of objectivity in Payback, yet I must concede that what this takes away in the power to persuade, it makes up for in the power to fascinate. Fischel is especially passionate and effective in responding to the ridiculously overheated claims of journalists that Milken was some kind of Nazi (Barron's) or one of the greatest criminals of all time (Wall Street Journal reporter James Stewart).

Fischel is so angry in Payback, in fact, that he discusses things one normally omits for propriety, yet that probably need saying. For example, Fischel, more than any other writer I know of, accurately captures the class and ethnic (mostly anti-Semitic) animosity that underlay some of the bitterness of the political fight over the corporate control market. Milken, T. Boone Pickens, Carl Ichan, and the other control-market pioneers also came largely from modest, or at least not wealthy, backgrounds. They were not likely to fit in at Chase Manhattan or Dillon Read. ...

Payback is a strange book. The book strives at times for academic objectivity and respectability, but then gives in entirely to passionate advocacy for Milken and what Fischel thinks he stands for. He excoriates the unfair treatment Milken got from the press and prosecutors, but freely attacks the personal integrity of prosecutors and judges, often with less than convincing support. Fischel introduces the book with broad themes of economics, but leaves them quickly behind to give us the blow by blow of the prosecution and defense of Milken, Keating, and the other defendants.

Yet, for all these contradictions, the book is a tour de force. It is not really a scholarly effort, though only a brilliant scholar could have written it. Payback is really an indictment of Giuliani and the judges, politicians, and journalists who helped him bring Milken down.

At the very least, however, one can say that the history of the 1980s takeover market simply doesn't lend itself to nice, tidy ethical stories that have obvious implications for the standing today of those who were players in that era.

As for me, where do I stand on the supposed debate? I stand by what I told the NY Times reporters:

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education,” said Stephen Bainbridge, a U.C.L.A. corporate law professor. “If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.” ...

Mr. Bainbridge, the corporate law professor, said that though he considered Ms. Stout a friend, he disagreed with her position.

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person,” said Mr. Bainbridge.

“I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

From <https://www.professorbainbridge.com/professorbainbridgecom/2011/08/ny-times-on-the-milken-gift-to-uclaw.html>

UCLA School of Law Deans

From <https://law.ucla.edu/about-ucla-law/history/past-deans>

UCLA School of Law Deans

Home Page

About UCLA Law

History

Current Dean 

MICHAEL WATERSTONE (J) - BIO

Past Deans

Russell Korobkin (Interim) (J)

2022–Present

Jennifer L. Mnookin (j)

2015–2022

Rachel F. Moran (J)

2010–2015 

Stephen C. Yeazell (Interim)

2009–2010

Michael H. Schill (J)

2004–2009

Norman Abrams (Interim) (J)

2003–2004

Jonathan D. Varat

1998–2003

--Message from Dean 1999 UCLA Law Mag

Susan Westerberg Prager (J)

1982–1998

--Deans busts on Diversity under the guise of standards

William D. Warren

1975–1982

--In memorium UC

--In memorium UCLA Law  - bankruptcy law leader

(6/6/2017) Uof Il Urbana-Champaign

UCLA Dean Emeritus William Warren passed away on May 30, 2017 at his home in Santa Monica, California. Bill was a giant in legal education and in his chosen fields of bankruptcy and commercial law.

Murray Schwartz (J)

1969–1975

Richard C. Maxwell

1958–1969

wiki - Maxwell did oil & gas law

in memorium UCLA - Maxwell joined the UCLA law faculty in 1953, four years after the school opened. He served as dean of the school from 1958 to 1969, and remained on the faculty until 1981. An expert in oil and gas law, Maxwell was an editor of the Oil and Gas Reporter for more than 30 years. He was awarded the UCLA Distinguished Teaching Award in 1976 and the UCLA Medal in 1982.

in memorium Duke

Oral History with Maxwell On UCLA Law's History

L. Dale Coffman

1949–1957

Past Deans

From <https://law.ucla.edu/about-ucla-law/history/past-deans>

From the Oral History of RICHARD C. MAXWELL

Richard C. Maxwell (1919–2016) served as the second dean of the UCLA School of Law from 1958 to 1969 and is credited with bringing the school to national prominence. He served as professor of law at UCLA from 1953 until his retirement as Michael J. Connell Distinguished Professor of Law in 1981 and thereafter at Duke University as Harry R. Chadwick, Sr. Professor of Law.

Thomas Bertonneau (UCLA oral history interviewer):

DESIRE FOR A CONSERVATIVE...

Maxwell: I was recruited, I think — I have no idea what induced them to do so, but I had at that time some reputation for a young person. I franKly think that I appealed to the then dean, Dale Coffman, because my expertise was in the field of oil-and-gas law and property law, and I think he probably felt that with that went a conservative view toward all aspects of life. And he thought, “If I can get someone who is accepted in the academic world, who also is conservative, that’s exactly what I want for this faculty.” Now, I don’t know [for sure]; certainly that wasn’t expressed to me.\

DIVERSITY PROBLEM

Maxwell: That was the problem. You know, you could have gotten along with a fairly dictatorial dean, you can work these things out; but the exclusion of Jews from the faculty and the patronizing of Blacks were no longer acceptable practices. He seemed happy to have a good Black student, but he would say, “This man is a credit to his race.” [He would] not realize that what he said grated on some of his listeners and sickened others. You should understand that this man was a charming man in many respects. He was simply acting the way some people of his generation acted. In another context, in another place, in another time, he would simply have been one of the boys at the local gentlemen’s club. At UCLA —

Bertonneau: He was a profound embarrassment.

Maxwell: In  the  1950s,  with  a  decent  academic  group,  it  would  not work. You could put up with authoritarian methods and understand his reasons for taking [the law school] out of the Academic Senate, but you could not put up with: “The one hundredth member of this faculty will be Jewish.” You either had to decide to fight about it or leave.

Frankly, at that point, I suppose, in a sense, the dispute kept me here. I was ready to leave: I’d had enough of trying to get housing; I never had particularly cared for all of the attractions of large metropolitan areas. It was a temptation to go back to Texas, and I seriously considered it; but then we all got embroiled in this thing. We carried it through, and I think humanely.

Dean [Coffman], of course, went to Washington to head a study on internal security procedures and was gone for a year. He came back to this faculty, perhaps because he had no place else to go that he would consider. We had, of course, an interim administration of Chancellor [Raymond B. Allen] as dean and James Chadbourn and Ralph Rice as an advisory committee to the chancellor. And we had Albert Harno come in — Let’s see, this was ’57, ’58. He was the former dean at Illinois, a highly respected man in legal education. He came in as visiting dean, and he was such a fine old man that he was in many ways very helpful and useful.

For one thing, he participated in the recruiting of Murray Schwartz and Addison Mueller, which I think was probably the best recruiting that any academic institution ever did in one year. These were not just good law professors; these were the best that could be had. Murray Schwartz was the first Jewish law professor recruited here. It just staggers the mind today. [laughter]

Maxwell: So they thought they would build a law school here that at least had a chance to be conservative. In an academic institution, this is a position that is totally unrealistic, but many boards of trustees or regents had this idea. But it won’t work and really shouldn’t work. What you ought to try to create is a faculty of great diversity, and you can’t pay attention to politics in the appointment of that faculty, or you’re just asking for trouble that will cause you years of grief and postpone the development of any kind of academic greatness. And it didn’t work, obviously.

Bertonneau: You said that you were a kind of a “reluctant groom” when it came to the deanship.

Maxwell: Well, leading up to it, we were looking for a dean the year that Harno was here. And I was instrumental in bringing out Howard Williams from Columbia, who was, I would think, one of the two or three best younger law professors in the country. We got him out here as a visitor for a semester, and I did my utmost — I can remember Ted [Edgar] Jones and I working on this very hard — to recruit him as a dean. I think he was ready to become dean of this law school; it would have been a great appointment. And I’ll be damned if the regents didn’t turn him down; that is, not formally, but they just decided they didn’t want to pursue it. For some reason or another, he wasn’t quite right for them.

 Bertonneau: You said that you were a kind of a “reluctant groom” when it came to the deanship.

Maxwell: Well, leading up to it, we were looking for a dean the year that Harno was here. And I was instrumental in bringing out Howard Williams from Columbia, who was, I would think, one of the two or three best younger law professors in the country. We got him out here as a visitor for a semester, and I did my utmost — I can remember Ted [Edgar] Jones and I working on this very hard — to recruit him as a dean. I think he was ready to become dean of this law school; it would have been a great appointment. And I’ll be damned if the regents didn’t turn him down; that is, not formally, but they just decided they didn’t want to pursue it. For some reason or another, he wasn’t quite right for them.

Bertonneau: Do you have any idea of the reasons?

Maxwe11: I haven’t the slightest idea; probably they thought he was too liberal. He was the most distinguished oil-and-gas lawyer in the country, a liberal in the sense that I was a liberal. I mean, he believed in the United States Constitution as the Supreme Court had interpreted it. I suppose that they were still looking for their conservative person. These regents were decent people, really. But I think that was the attitude, and I think that’s what might have happened.

I was disgusted beyond belief. Again, if an appropriate opportunity had come along, I would have left. Although by that time I had managed to buy a house, and the way I did this was to teach the “cram course.” I taught the bar cram course long enough to gather enough money for a down payment, and I bought a house in Pacific Palisades. So this blunted my discontent somewhat; if it hadn’t been for that, I’d have been gone. In fact, I was disgusted with the academic world. What I really regretted was that I hadn’t gone into practice in Minneapolis.

Bertonneau: Well, that’s a kind of unusual statement, because you’d wanted so much to get back into academia.

Maxwell: I had wanted to get back into academia, but the experience I had had here with academia during those two or three years had pretty well convinced me that I had been in academia, and now I ought to go and do something else. And frankly, looking back, I’m glad I had the opportunity to be dean of the UCLA law school, but I’m  not at all sure that  it would have been so bad to go back and practice law in Minneapolis. The opportunities that might have come from that, in terms of interesting activity, could well have been fine; but I had a house. And frankly, I had worked very hard that year: I’d been chairman of the Curriculum Committee; I’d been deeply involved in the administration of the school with Harno.

But out of the blue one day — to me it was out of the blue — Harno called me down to that office, and he said, “I have the president of the university on the phone, and he says that the regents have agreed to appoint you acting dean. Will you take it?” Now this was difficult. He had the president of the university on the phone.

“Well,” I said, “I’ve got to think about this for a day or so.” So they gave me a day or so to think about this.

I really was not terribly interested in doing this.

 It was a very unpropitious situation. I really had no particular desire to be a law dean;

I certainly hadn’t applied for the position.

I was thinking seriously of leaving academia.

 Except for the hard-won house in the Pacific Palisades, I wasn’t pleased with Los Angeles or the University of California. I was disgusted with it. I mean, all of this is true.

I was not disgusted with my colleagues, for whom I had gained, really, a tremendous respect. When you added Mueller and Schwartz to Rice and Chadbourn and McCoid and [Kenneth] York and [James] Sumner and Ted Jones — they were great people. They were willing, and they wanted me to take this post. Apparently, they had worked on this. They thought I would be acceptable. So I said I would. [laughter]

At first, I thought I wouldn’t move into the dean’s office; I was really very reluctant.

I’d stay in my office up in the law school. For example, I was involved with Charlie Meyers and Howard Williams in writing an oil-and- gas treatise. I was involved with Charles McCormick of Texas in rewriting his hornbook on damages [The Law of Damages]. This is what I wanted to do and what, academically, in terms of both career and accomplishment, I ought to do. But obviously, you couldn’t be dean in the situation we had here and continue such activity.

Bertonneau: How long did it take before you came to that realization?

Maxwell: Oh, I knew that at once. I knew it, but I didn’t face it. I didn’t withdraw from these things during that year I was acting dean. And I finally moved down to the office and began to do the best I could with it. I think it was toward January or so — we were having a meeting of some sort of the Curriculum Committee — and I made some comment: “Well, after all, I am only acting dean.”

Mueller said, “You better start to think in other terms.”

I really didn’t think, given the circumstances, that they would appoint anybody from the faculty [to be] dean. It didn’t, in many ways, make sense.

Coffman was here and he was writing little notes to some of the regents about the leftists that were being appointed and one thing or another. The chancellor called me over, Raymond Allen, whom I had come to like very much personally, and he said, “You have to make up your mind. Are you going to stand for dean or aren’t you?” [laughter]

 I had a tremendous desire at that time, really, to say, “To hell with it.” I had discovered the level of activity that was going to be necessary to be a successful dean here, and I was smart enough to know that with that level of activity, if I’d gone back to Minneapolis or Dallas or wherever to practice law, I could soon have made a great deal of money. I could have gone back to the oil business with a good chance of moving on to high executive office.

Frankly, I am uncertain why I stayed. I suppose I had started out on an academic career, I had gotten involved with this law school, and I was very much attached to the people who were here.

So I said, “All right.” I put it this way: “If you want to consider me as dean, you consider me, and you consider me now. If you’re going to consider me, and you’re going to bring people in for interviews, forget it. If you want to offer me the job, I’ll take it. But you decide right now.”

That’s the way I put it; I was not going to run for dean. I was not in that frame of mind at all, and I didn’t have to do that, frankly.

I had all kinds of opportunities. For one thing, I could have gone back to the University of Chicago, where Ed [Edward] Levi, for one reason or another, was trying to recruit me over that whole period of time. That wouldn’t have been a bad idea either.

Bertonneau: Was your appointment as dean a major step in reconsolidating the law school faculty, or were there still tasks that you had to perform?

Maxwell: Oh, heavens. The tasks I had to perform stemmed from the fact that the school had such a terrible reputation. This was not a reputation based on any form of educational deprivation that the students were going through — I think it was a good place for students — but its reputation in the nation as a whole was not good.

Well, here I was; I was kind of stuck with it. I didn’t have to be stuck with it, but in a sense, you get involved, you have other people who were now, by this time, relying on you, although you hadn’t particularly given them any reason to do so. And so you’re carried along. This seems to be the way careers develop. But I certainly did not set out to become dean of this law school, and I must say that once the regents got to looking at the question of appointing me, had I not then been stubborn, I would have withdrawn.

[The regents] assumed that since I had been involved in this affair with Coffman, there was a good chance that somehow I must be supported by the forces of the Left; they investigated every aspect of my professional and “political” life. I got letters from people saying, “What in the world is going on?” Well, the fact was that I had never been at all political. I had plenty of opportunities to be political: I was very close personally to people like Orville Freeman back in Minnesota, and through Orville to Hubert Humphrey. Orville wanted me to go into law practice when we graduated from law school. If I had done that, I might have become political, but frankly I wasn’t political. Orville wanted to run for governor of Minnesota, and he did. Hubert Humphrey wanted to run for something else, and he did, too. But I had no particular personal interest in politics.

So [the regents] investigated this; they discovered that what I was, was a law professor who had been a successful oil-and-gas lawyer, and that I had no real political history. [laughter] I was a Democrat, all right, and it was obvious that I had an attachment to the Bill of Rights, but beyond that there was nothing to report.

But this investigation, particularly one incident, which focused on the fact that my father had come from Russia, was difficult to take. Now, my father was a Presbyterian minister, but someone suggested that because my father had emigrated from Russia, I must be Jewish. [laughter] Imagine this kind of stuff!

Bertonneau: It’s stunning.

Maxwell: The chancellor called me over and, in an embarrassed way, told me about this. I said, “Really, if this question makes any difference one way or the other, I would like to get out of this mess.”

But he calmed me down. I do not remember how. At that point I was very angry, but he kept me from exploding, and the regents went ahead and appointed me. I think some of them did so with reluctance, because I had been a part of the faculty that had started the process that led to the end of the Coffman deanship. I suppose, too, there were lingering doubts as to whether I really was some kind of a leftist. This problem continued for some time, and I paid as little attention to it as possible.

AFFIRMATIVE ACTION / DIVERSITY / DEI

Bertonneau: I’d like to ask you about the recruitment of minorities and the effect of affirmative action and so on, on the law school.

Maxwell: Well, we didn’t really call it “affirmative action” at all when it began. The problem began to be taken cognizance of, oh, let me see, it must have been about 1962. It was very easy to see, if you were greeting entering classes, that there were almost no minority people in those classes. Oh, yes, there would be an occasional Black student. We had some very distinguished Black students back in the early days. One, of course, was Billy Mills, who has made a great career for himself. There was an occasional Mexican-American student. We did not call Mexican Americans “Chicanos” in those days, and we paid no particular attention to that fact. There was at least one very dis- tinguished Mexican-American student I can think of, distinguished in the sense that he has had a tremendous legal career. That’s Tino [Florentino]

Garza, who now practices out in Riverside, San Bernardino way. Of course, we had some Japanese Americans and Chinese Americans, but this was not really the problem we had in mind.

The problem was, basically, the lack of Black students and Mexican- American students in a city and in a region that had a heavy Black and Mexican-American population. It was apparent, I think, to anybody who could look and think about it, that if the only state law school in an area of ten million people was going to have, at the most, one or two minority people in a graduating class, something was awry. And given what was beginning to be the temper of the sixties, with the civil rights movement, et cetera, people began to, I think, be aware of this problem.

I have heard people say, particularly individuals who have in recent years harassed the law school, that the law school was pressured by the civil-rights movement into doing something about the admission of more Black and Mexican-American students. This is sheer humbug. There was no pressure of any sort from anybody. We made contacts with individuals in the Black community that we thought could help, for example, and they were interested; but no one thought of any way to handle this problem. We sent members of the faculty and the administration out to some of the col- leges where there happened to be a heavy Black population, for example, and talked about law school. The fact was, however, that in that time Black students, particularly — and I think probably the same was also true of Mexican-American students, but I have less personal knowledge of the attitude — but people in the Black community didn’t think that there was much future for Black lawyers. They didn’t think that they would be welcome here, at least that was the impression I got. And the fact was also that given the state of education, over a good many years, there were very few Black students that could come close to reaching that level of G.P.A. [grade point average] and law school admissions tests that would qualify them for admission. Now, some of the — I was going to say some of the eastern schools had begun to recruit, but I don’t think they really had, by that time.

Bertonneau: You’re talking about the early sixties?

Maxwell: Yes, I’m talking about the early sixties.

Bertonneau: May I ask you this? When did the problem become ex- plicitly articulated? I mean, was there a point where you called together your faculty members and said —

Maxwell: Oh, yes, there was a point, there was a point. But I’m talking now about just what the atmosphere was. Well, actually there must have been two or three years in which there wasn’t a single Black person in class. And I believe that it was about 1965 that Leon Letwin, who was particu- larly interested and concerned in this matter, put together a kind of a pro- posal, which involved, in effect, admitting minority students because they were minority students. You weren’t talking about a quota or anything of the sort. You were talking about making an effort to find five or ten people that you thought had some chance of handling the law school curriculum, admitting them, and not being color-blind about it.

It’s hard, I think, for the modern generation to understand that in the early sixties — I can remember a council meeting, that is, the Chancellor’s Council, which was all the deans and high administrators, worrying about the problem of removing pictures from applications, on the theory that you would then be color-blind. This was the big thing: equality of treatment. Well, that kind of equality of treatment meant basically that there would be no Blacks and, I believe, no Mexican Americans in the law school. So you had the removal of the pictures — it occurred. I mean, this was at a point, at the high-water mark of color-blindness — one might almost say “blind- ness” — and then it became apparent we had to go in the other direction.

Well, this proposal was, as I stated, a fairly simple proposal. The docu- ment, I suppose, is somewhere around the university. I don’t know where it is, but it simply detailed the very small number of minority people in the profession. And it was a very small number. The profession certainly had been, I think, hostile to equal status — for Blacks, particularly. There was a time when the American Bar Association wouldn’t take Black members, believe it or not. Obviously, that was gone by the early sixties. However, the faculty approved this, and this was very difficult for the faculty. It wasn’t a matter of anyone being a racist or anything of the sort.

Bertonneau: Excuse me. What is it specifically that the faculty approved?

Maxwell: The faculty approved the idea of accepting a certain number [of students] — I think ten, if you want to call it a quota. It was a search, at that point, for ten people that would devote themselves to the institution. We managed to get some money, from one source or another, to give a kind of a scholarship so that people wouldn’t have to work; the university cooperated with the faculty. The faculty was very concerned about this, because it completely overturned whole years of great effort to keep admissions free of any kind of influence in this public university. And here we were saying we’re going to admit people on the basis of their race. This was a very difficult idea, and that is what we were doing. It wasn’t any matter of admit- ting people that were economically deprived; we were admitting people because they were Black or Mexican American (later Chicano).

Now, I took this to Franklin Murphy, and he was supportive. There was no opposition but actually some help from within the university, so we admitted a class. I believe it must have been about ’67 before that class was admitted. The record is somewhere in the university, but that matters not. It was not an easy business with that class.

Bertonneau: What were the difficulties?

Maxwell: Well,  the  difficulty  was  that  we  had  admitted  people  who were not as prepared academically as the bulk of their colleagues. We had great difficulty, for example, with a question like this: we have admitted people who we think can make it through law school (and certainly many of them did). Should we now separate out this group and give them special tutoring? We attempted to do this in a number of ways, and we continued to do this over the years, really.

There was sometimes an irritated blowback from the students over this; then there would be a movement to have more of it. At any rate, this program evolved, developed; it got to the point finally where, when the law school came to the size of a thousand students, and we were talking about three-hundred and fifty or so in an entering class, we tried to take about seventy minority students in that group. And it was always very difficult.

For one thing, when you began to talk about something that was, substantially, a quota, then you had the question, how many people from each group should come in, and what groups should be involved? These are terrible problems, unbelievable problems. You’ve got, of course, the organization of minority students in the law schools: Black Law Students Association, Chicano Law Students Association, Asian Law Students Association. It became one of the most complex political, using political in the sense of any situation where there are benefits to be awarded and groups that will benefit and a benefit-granting agency, like the law school.

However, putting all of those difficulties to one side, the so-called LEOP program, the Legal Educational Opportunities Program, as it came to be called, with all of its difficulties, did integrate the California bar. There is no question this school led the country into the era of making very special efforts to do something about this problem. Now, of course, the LEOP program is gone; the [U.S.] Supreme Court says that now race can be one factor in the administration of an admissions process, and our process now uses it that way. I think to a great extent the minority students that are now admitted do not think of themselves as a specially admitted group, and they are not in that same status any more. And I think this is probably a good thing. But there is no question that now, and I would guess for at least another few years, that if you don’t pay any attention to race, if you go back to the point where the pictures are taken off the applications and the mention of race is a no-no, the law school would not be attempting to educate as many minority people as is desirable, given the needs of as diverse a society as this one is.

Now, of course, there are many who say that it shouldn’t be the law school’s business to worry about societal problems; but this is one societal problem that has to be worried about by the university and the law school, or it just won’t ever be solved. Of course, the answer that, I suppose, some people would give to that is that what you do is to improve housing, im- prove job access, improve schooling in the lower schools. But if we had waited for all of that, I think the bar would still be largely as it was, and one of the factors that will bring about the improvement of other aspects of society — the political clout, leadership abilities, and abilities as practicing lawyers of minority people — would have been lacking. So there were all kinds of painful moments.

Bertonneau: It sounds a little bit like, in the beginning at least, that that whole process was rather improvisatory, that you were

Maxwell: No question, no question.

Bertonneau: How long did it take before you had a definite style?

Maxwell: Oh, a couple of years, a couple of years. We had as assistant dean Anthony McDermott, who began to worry about this problem, al- most to the exclusion of other problems, acting as counselor, admissions expert, acting as kind of a law school counselor to those of the so-called LEOP program. Now, people from that program, many of them, had great difficulty with the bar; many of them, however, are now very useful and successful lawyers in many aspects of life. I think the program was more trouble than anything else, trouble for administrators, trouble for faculty, painful in some respects. There were confrontations, occupations of the dean’s office, hunger strikes. It has been a great problem over the years.

The fact is, however, that probably nothing that we did was really more useful. There were plenty of lawyers being white lawyers, majority law- yers — if you can call it a majority in Southern California — standard American lawyers being trained all over the country. But we did pick up something here and run with it, even though occasionally we were run- ning barefooted over very, very hot coals. There was plenty of criticism from all sources.

Bertonneau: So you found yourself cast in the role of villain sometimes. Maxwell: Oh,  frequently.  It  was  very  hard,  I  tell  you,  to  an  alumni group who had been admitted in an almost pristine admissions system. At least in the early days of my deanship, I made a very special point of accentuating the fact that we did not give in, in favor of political forces, monetary forces, and I had plenty of opportunities to give way, both for suggestions of large donations to the law school and suggestions that our political [situation], and the university’s political situation in Sacramento, would be far better off if we admitted X, Y, or Z. We held absolutely firm against that. Now, all of a sudden, to many of the alumni, it looks as though the priestess has become a prostitute to them. You’re suddenly admitting people because of their race; and, oh, yes, we caught hell on this issue many times. And the [U.S.] Supreme Court eventually decided that we were in- deed illegal. That’s what they decided.

What they decided, however, hasn’t destroyed this process. This isn’t a time at which I care to comment on the wisdom or otherwise of Supreme Court decisions; but whatever it was that we did, it did advance, if that is desirable, the cause of a bar that is fairly representative of the population in this country. And in a nonhomogeneous society — which is, of course, what this is — I think that that was a very desirable thing.

Bertonneau: In your brief history of the law school, you state at one point that there were never any barriers to the admission of women stu- dents at this institution. But weren’t there barriers to the admission of women in the infrastructure of society?

Maxwell: Sure there were. But now there my personal attitude is totally different. You will find that I have welcomed women to this law school — I am not known as a sexist — but I would never stand up and say in the same phrase, “women and minorities.” I do not consider that the same problem.

Bertonneau: Can you explain?

Maxwell: I would never have lifted a finger to recruit women for this law school; I would never have allowed anybody to interpose a feather against their admission. I welcome them; I think they’ve improved the student body considerably. But I don’t think that is at all the same problem. I think that anybody that thinks that it is has simply either not thought about it or doesn’t want to think about it.

Bertonneau: For the sake of argument, let’s pretend that I am a person who thinks that there is a similarity.

Maxwell: I think that society can be organized in a variety of ways. I think that the kind of society that existed when I was young was one in which most women did remain in the home and sustain the family. It happened that my own mother worked. It happened she was divorced. I know all about this sort of thing. But I would have to say that I have absolutely no sympathy for a point of view that says if women do not get out into the world and work, if they stay home and try to build families, this is some- how ignoble and a less desirable societal structure. It certainly is a different societal structure.

Now we have a society in which divorce is easy, in which attachment to marriage is, I think, much less, in which the family structure is in many instances not as strong, in which illegitimate births have increased to a percentage that is shocking. I certainly don’t lay this to the fact that women have been admitted to law school, but what I am saying is that this is a different kind of society. And to say that this is a better society, that the other was immoral or a deprivation of rights — the relationship between men and women and the differences between men and women are not at all like racial differences. I think that discrimination on the basis of race is immoral in, if there is such a thing anymore, an absolute sense. I think making distinctions between men and women — in relation to military service, in relation to giving women alimony and not men — personally, I don’t think that is immoral at all.

If society wants to change, and it is changing; that’s the business of society. But I would have to say that I would not have lifted a finger to advance the change. Now understand, I would never have allowed any prejudice against women that wanted to go to law school. But I would never in the world, as you can see, have said that it is necessary for the good of society to admit women to law school, even though they may not have the paper qualifications of men. It was never necessary to do so. When the time came that women decided they wanted legal careers, they came to law school. And they have been magnificent. Now, whether it is a better world because they have done that, I haven’t the slightest idea. But I think in one sense, at least, it is a better world, insofar as there were bar- riers to women in the profession. And there were. I think a human being ought to be able to engage in the activities that that human being wants to engage in.

I can remember in the early days that our best women were very difficult to place. I used to have to call four or five offices to place them. Now, that’s outrageous. I think that’s wrong. But I think it is also wrong, in this day and age, to have a situation where the brightest women in our population, who have no economic problems, are creating a situation where women without their education and qualifications feel this tremendous urge, for their honor, to get out into the marketplace — that somehow they are not pulling their share of the world’s burden if they’re home raising two or three children. I haven’t any sympathy with that whatsoever.

Bertonneau: Let me ask you: what do you see as the responsibility of an educational institution like the law school at UCLA when it comes to social issues and problems in society that seem to be as grave as the discrimination against Blacks and Chicanos was twenty-five or thirty years ago?

Maxwell: The reason I felt that we ought to take a leadership in rela- tion to the admission of Blacks and Chicanos is that I saw no other way. It was a societal problem, and we were the institution of society that was at that time in a position to do something about it. Now, I was not in favor of the Vietnam War as it was conducted; but I certainly didn’t think that the law school was an institution that should have or was obligated to take a position of leadership against the Vietnam War. I mean, if the faculty as individuals wanted to pass motions against it, of course they could. But I didn’t feel that the UCLA law school as such had any place in that particu- lar controversy.

For example, I think that certainly the law school has an obligation to maintain an atmosphere where the faculty can pursue its scholarship in any direction that it wants to go, and that’s sometimes very difficult to maintain. But for the law school as such to take political action is anath- ema to me. Now, the admissions problem was political action. But we were the institution that was either at fault or not acting. We could do some- thing about that. We were the institution that was educating lawyers and admitting them.

I personally, over the years, took the position, probably to my detri- ment (which may be a self-serving declaration), that I would not take part or allow the use of my name in any partisan campaign. For example, in the Kennedy election [1960] I was asked to join a list of Southern Califor- nia sponsors. I wasn’t terribly enthusiastic about Kennedy. But I was more enthusiastic about Kennedy than I was about Nixon, and if I had been an individual law professor I would have joined in that group. But as dean of the UCLA law school, I felt it was improper.

I can tell you that that is not a position that is maintained by most deans, who perhaps quite properly use the deanship to promote their po- litical ends. [laughter] I personally didn’t think that was proper. That may sound like kind of a saintly position, but I just thought it was wrong. Now, on the other hand, I thought it was completely proper, as dean, to promote the understanding and teaching of the Bill of Rights in the public schools, which was a position that got me far more brickbats. If I had gone on the Kennedy list, people would have said, “Well, look, Maxwell’s getting into politics.” When I supported the idea of teaching the Bill of Rights in the public schools, I had to defend myself against every charge from being a Communist, to the general charge of subverting schoolchildren by teaching them about free speech.

Bertonneau: You were on the board of directors of the National Assembly on Teaching of the Bill of Rights.

Maxwell: Well, that’s where the movement really started, if you can call it a movement. The assembly was simply a — about all the assembly ever did was to call a meeting in Virginia at a very nice conference center — Airlie. They had two justices of the Supreme Court who came. It was [William O.] Douglas and [William J.] Brennan, [Jr.]. But, at any rate, this kicked off a national movement to improve the teaching of the Bill of Rights in the public schools. Now, this actually was, in a sense, a political movement. But it was a political movement, I felt, that as a law dean I had some obligation to help with. The law schools, again, are involved in educa- tion, and I don’t think it is wrong to have people understand the political system. I think it is wrong to set up a situation where people are more or less indoctrinated about the political system.

But, at any rate, it was political because you may recall — you probably don’t — that Earl Warren, at that point, was being pilloried on billboards all over the country. He was simply a symbol, and he was a symbol because of Brown v. Board of Education, which had decided that legal segregation was no longer constitutional in this country. We had had the prayer decision. The Supreme Court was under, I thought, considerable unjustified criticism at that point, and it seemed to me that if you were going to talk about any kind of a reasonable approach to protecting the Constitution, the reasonable approach was to try to teach the American people, at a point where they could put their minds to it, something as to the values that sup- ported their central document. And that was all that was involved.

WIKIPEDIA Michael SCHILL - 

Penn Law-Wharton - 1987

NYU Law - 1995

UCLA Law Dean (financial rainmaker) 2004 to 2009

U. of Chicago Law

U. OREGON - President  (2018 to 2022

NORTHWESTERN - 2022 to present

Source Wikipedia

In 1987, Schill joined the faculty at the University of Pennsylvania Law School and the Wharton School. He served as assistant professor of law from 1987 to 1992, and became professor of law in 1992. From 1993 to 1995 he was professor of law and real estate. [great for financial donations]

In 1995 he moved to the New York University School of Law and Wagner School of Public Service, becoming professor of law and urban planning. [aka real estate]

• Simultaneously, he became the founding director of the Furman Center for Real Estate and Urban Policy. 

• He held both positions until 2004, and in 2003 he additionally became the Wilf Family Professor in Property Law.[3]

UCLA - 2004 to 2009

In 2004, Schill became dean and professor of law at the University of California, Los Angeles School of Law.[7] During his five and one-half years at UCLA, Schill recruited leading legal scholars from top schools across the nation and established thirteen endowed chairs. He launched three new legal research centers and two academic specialization programs.

Alumni participation in fundraising doubled during his decanal tenure, and private philanthropy tripled.[8] Schill served as chair of the Council of Professional School Deans and sat on the UCLA Chancellor's Executive Committee.[3]

U. Chicago Law 2010 to 

During Schill's tenure as dean of the University of Chicago Law School in 2010, the law school expanded its faculty, increased incoming student credentials to record levels, doubled fundraising and established new centers and curricula in law and economics, business leadership and public interest law. In addition to serving as dean of the law school, Schill was appointed professor in the college, where he taught a course in law and urban problems.

From <https://en.wikipedia.org/wiki/Michael_Schill>

UCLA Law dean Michael Schill to resign, head law school at University of Chicago

By Office of Media Relations

September 08, 2009

The following letter from UCLA Chancellor Gene D. Block was sent Sept. 8, 2009:

Dear Colleagues,

It is with a sense of loss for UCLA that Scott Waugh and I share with you the news that Michael Schill, dean of the UCLA School of Law, has announced his intention to resign at the end of the calendar year to become dean of the University of Chicago Law School.

Under Mike's leadership over the last five-plus years and through his passionate commitment to excellence, the UCLA School of Law has advanced in a number of important ways. It has received a record number of applications and enhanced the academic culture among students, recognizing achievement and substantially increasing the number of judicial clerkships obtained by students. The credentials of the class of 2012 are stronger than those of any previous class.

During this time, the school also has established two new research centers, begun three new academic programs and expanded the graduate program in law. A $100 million endowment campaign begun last year — the school's first — has already achieved more than 65 percent of its goal.

Mike has enhanced UCLA's excellence by recruiting faculty from some of the nation's leading law schools, as well as establishing 13 endowed chairs. During his tenure, the school has increased its racial and ethnic diversity among students.

During the coming week, Scott and I will meet with the leadership of the law school to discuss plans for the future. We are confident that the school will continue to thrive, building upon the solid foundation that Mike and his colleagues and predecessors have built.

On behalf of UCLA leadership and the entire university, we want to thank Mike for his exemplary service and extraordinary contributions and wish him every success in his new endeavor.

Sincerely,

Gene D. Block

Chancellor

From <https://web.archive.org/web/20100627063728/http://newsroom.ucla.edu/portal/ucla/michael-schill-101411.aspx?ncid=5371>

Schill explains school’s silence on Israel war

NU President Michael Schill.

While personally condemning murders of Israelis by Hamas, Northwestern University President Michael Schill says the university itself will not be making any comment.

In a message to NU senior leadership, Schill says he and the school’s provost have been asked about a possible university statement on the war in Israel.

The NU president notes that he attended a Vigil for Israel on campus on Monday night, however, that was as “Mike Schill,” individual, and not as NU taking a position.

Schill’s message says “I am deeply repulsed, sickened and disappointed by what Hamas has done. Kidnapping, beheading, murdering people … is horrific and inhuman. Pure and simple. This sort of behavior is entirely unacceptable regardless of one’s political convictions or grievances. Period. No moral equivalencies needed.”

The NU leader said, “This is the view of Mike Schill, citizen, Jew, and human being. I didn’t give up those parts of me when I assumed the presidency of Northwestern.”

However, Schill says if he puts out an official statement as the president of Northwestern, people see that as the university’s position.

He says, “We are a University which celebrates free expression, diversity of people and diversity of viewpoints. This is essential to our role in society. The university does not speak for our students, faculty, and staff on these matters…. For me to speak for them displaces their own freedom to speak.”

Across the country some university leaders have issued statements on their schools’ behalf on the Israel-Hamas war, while others have refrained from doing so. Either approach has led to criticism.

Schill notes that regardless of what may have happened at NU in the past, “I do not foresee that I will be issuing statements on political, geopolitical or social issues that do not directly impact the core mission of our University, the education and futures of our students, or higher education.”

Schill notes that his position may be controversial.

“This reticence to speak out as President Michael Schill will sometimes please and often infuriate members of our community. But I believe it is the right approach.”

Schill’s comments have been linked by the campus Jewish center, Northwestern Hillel, to an email to its members, for their information.

The Hillel email says that the organization “is taking steps to ensure the physical safety of our students, our community, and our Hillel building.”

It notes that there has been a call by some pro-Palestinian groups for “days of Palestinian resistance.”

However, it says there have been no credible threats here or in the U.S., but “we are raising our level of alert” by working closely with Northwestern and Evanston police, with private security, and “we have requested increased support from these security partners to ensure the safety of all of our community members.”

Hillel students organized a Monday Vigil with 400 people praying for those who were killed, injured, and held hostage.

The organization is also providing “round the clock advising and pastoral care to NU Jewish students, and has also been in touch with parents.

The Hillel leaders say they are “overwhelmed with compassion for all innocent victims.”

“We detest oppression and hate in all forms,” and it is vital to “see each other’s humanity and stand in solidarity with all those facing discrimination and inequality.”

Those who hold these values, the Hillel statement continues, “must be capable of condemning Hamas’ attack on Israel while simultaneously mourning the loss of life and supporting a peaceful resolution to this conflict.”

eff Hirsh

jeff@evanstonnow.com

Jeff Hirsh joined the Evanston Now reporting team in 2020 after a 40-year award-winning career as a broadcast journalist in Cincinnati, Ohio. More by Jeff Hirsh

From <https://evanstonnow.com/schill-explains-schools-silence-on-israel-war/>

UO-2021JUNE2 President Schill condemns anti-Semitic violence, harassment

June 2, 2021 -

UO President Michael H. Schill sent the following message to the campus community June 2:

Dear University of Oregon community,

All too often over the past five years, I have written to the campus community condemning violence and expressions of hatred targeted to particular groups. Today, I write not just as the president of the university, but also as a member of a group that is the object of hatred. Violence against the Jewish people has existed for centuries and in recent years has accelerated with the growth of white supremacy. In the past couple of weeks, fighting in the Middle East has unleashed a new wave of anti-Semitic sentiment — from hateful language scrawled on walls to vicious acts of violence. 

The Israeli-Palestinian conflict is complex. Whatever your views about this ongoing tragedy, nothing justifies either verbal or physical attacks against innocent people based upon their religion, regardless of whether they believe in Judaism, Islam, Buddhism, Hinduism, Christianity, or something else. We must stand up to hatred against people based on religion, race, national origin, gender and gender expression, or who they love.

Throughout history we have learned that silence in the face of evil begets more evil. The end of bigotry and racism starts with each of us, individually, lifting our voices. Please join me in condemning the recent wave of anti-Semitic violence and hatred. Our nation is better than this.

Michael H. Schill

President and Professor of Law

From <https://around.uoregon.edu/content/president-schill-condemns-anti-semitic-violence-harassment>

Fighting a Hostile Takeover; Michael Milken

By Tom Teicholz | June 5, 1994 | New York Times

From <https://www.nytimes.com/1994/06/05/magazine/fighting-a-hostile-takeover-michael-milken.html>

ON MARCH 2, 1993, Michael Milken was supposed to become a free man.

Once the most powerful player on Wall Street, Milken, whose innovative use of high-yield securities -- junk bonds -- raised billions for companies like MCI and Turner Broadcasting, had just been released from a Hollywood halfway house, after serving 22 months in prison for securities-law violations. He had pleaded guilty to only 6 felony counts (he had been indicted on 98), none having to do with insider trading or racketeering.

Nevertheless, when it was revealed that he earned $550 million in a single year, his image had been cast: he was blamed for all the country's economic woes -- layoffs, the failure of the S.& L.'s, the national debt. In the end, he paid more than $1 billion in fines and settlements and was banned from the securities industry for life. When his imprisonment ended, seven years after the investigation into his dealings began, it looked as if Milken had survived the worst.

But on the very day he was released, Milken, then 46, learned he had prostate cancer, a disease estimated to have afflicted 165,000 American men last year, resulting in 35,000 deaths. Though Milken looks fit and has no symptoms, the cancer has spread to his lymph nodes, and when that happens there is no consistently effective treatment.

For a man used to controlling his fate, Milken was devastated by the diagnosis. Still, true to his nature, he refused to let it defeat him. He became determined to mastermind (and finance) a cure. In a matter of days after the diagnosis, he had contacted physicians all over the country. Within weeks he had met with leading researchers, and within two months he had created a foundation, Cap Cure (The Association for the Cure of Cancer of the Prostate), to which the Milken family's foundation has pledged $5 million for each of the next five years. (The foundation has already financed 30 programs at 24 academic centers.) All this while performing court-ordered full-time community service, trying to spend more time with his family, writing his memoirs and receiving treatments for a disease that could kill him within a year.

For this interview, we met several times over the last few months at the offices of Cap Cure and the Milken family foundation in Santa Monica, Calif., and at his home in the San Fernando Valley.

Milken was by turns personable and maddening: it was hard not to admire him for what he hopes to accomplish, yet his unapologetic view of his past bordered on the naive, as if he could not understand why the world fails to see him as he sees himself.

Q: In early 1993, shortly after you were released from prison in Northern California to a Hollywood halfway house, your own internist gave you a complete physical and told you that you were fine. He also checked your prostate and found no cause for concern. But while you were in prison, several friends, including Steve Ross, found out they had prostate cancer, so you insisted on taking a P.S.A. -- prostate-specific antigen -- blood test. What happened next?

A: On the day that I was officially released from the halfway house, I received a call from that same doctor who told me that all my blood tests had come back perfect. But the very last thing he said was: "Except you have this elevated P.S.A." Around 22.

Q: Which is very elevated.A: Right. Within hours, I got a little paperback that says if you have a P.S.A. over 20, the odds that you have prostate cancer are over 90 percent. I immediately started calling close friends who had dealt with prostate cancer. After talking to everyone, I identified Dr. Stuart Holden, here in L.A. at Cedars-Sinai Medical Center, as one of the leading urologists in the country. I had a blood test in his office, and the results were confirmed.

I was a little depressed, but I think a conscious effort that I made, and this might be a link to the previous seven years -- it is a link -- is that I wanted to do something different. When the investigation began in 1986, I knew I wasn't involved in insider trading, and I didn't take the charges seriously. So this time I decided to take a very aggressive approach.

Q: What did you do?

A: I discovered they were having a conference of prostate cancer scientists in Houston. I wanted to attend and see for myself what was going on. I had to get permission to travel out of the state, because I'm on probation.

Q: And what did you learn at this conference?

A: The very first slide I saw was this epidemiology study that showed that Alameda County, Calif., has the highest incidence of prostate cancer of any place in the United States.

Q: Alameda County being next to the location of the prison camp where you were incarcerated. Are you saying your prostate cancer was caused by being in prison?

A: It might not have helped me. It has also made me wonder whether a study should be conducted of all the men who have been housed there. My guess is not too many of them are getting P.S.A. exams. But I'm going to try to undertake a study of that issue.

Q: What happened next at the conference?

A: A few slides later, I saw the curves on life expectancy. And I'm in the one-to-two-year life-expectancy chart. I then had to take a break

.Q: Did you wonder, why you? Why now?

A: Well, the story of Job comes to mind. Job was always saying: "Why me?" But I had that for seven years.

Q: Did you feel as if you were being punished?A: Well, It's easy to find things in that story that I could identify with. I've had a lot of challenges. And I forget the quote -- it may be Martin Luther King. It really stuck with me: that the measure of a man is not how far he's traveled, but how high are the hills he's had to climb. So essentially I view prostate cancer as, I just got another mountain.

Q: After returning from the conference you met with many of the nation's most prominent prostate cancer doctors and scientists. What did you learn from them

A: How little money is being spent on prostate cancer and why something takes a decade to accomplish that I believe should take a year. For me 15 seconds was a long time. I had to make decisions -- yes, no, buy, sell -- based on everything I ever knew. But in medicine, last year for the first time in 15 years they introduced a new drug for epilepsy -- 15 years! I can't wait 15 years for a prostate cancer cure. If people are dying every 15 minutes, forget me. Essentially Cap Cure was born from that trip.

Q: What course of treatment did you decide upon?

A: I went on hormones and over several weeks, my P.S.A. went from 24 to 0. At the same time I began my Eastern medicine. I began a friendship with Deepak Chopra [the author of "Ageless Body, Timeless Mind"], and today we are very close.

Q: And you decided to do visualization and meditation?

A: I began his meditation process. Then I arranged to go back to Lancaster Maharishi Ayur-Veda Health Center [a facility in Massachusetts where Deepak Chopra was medical director]. I went there with my wife, Lori, and Michael Jackson, who was very concerned about my health. After I returned home I had a doctor from Colorado who was very into Ayurveda Indian herbal medicine come live with me for the next three or four weeks. It involved meditating in the morning and exercising in the evening. I tried to change the way I ate. I have plastered up in my kitchen the proverb that says it's better to eat a stone sitting down than a banana standing up. I rented a house at the beach. I did substantially change my life style for six months between March and September.

Q: What changed in September?

A: Well, first my P.S.A. had come down. My lymph nodes had shrunk by 90 percent, and my prostate had shrunk dramatically. So I had responded as well as anyone to this hormonal treatment, far better than anticipated. But tests showed I still had prostate cancer cells.

I started radiation in November. It's very dehumanizing. In order to hold you in the proper position during radiation they have to create molds of you. I've got my tushy mold at home. At the hospital sometimes I would be lying face down in an uncomfortable position for an hour and a half. I would then actually meditate on the radiation table.

Q: How is Cap Cure going about finding a cure for prostate cancer?

A: Say I'm going to build a factory and have it operational in two years, what do I have to do? What takes the longest? What approvals do I need? I've been focusing on the development of the cure in the same way. The difference between a professional soccer team and young kids is that all the kids run to the ball instead of staying in their positions. We want people in gene therapy to work in gene therapy; people in immunology, there; people in chemotherapy, there.

Q: Let's talk about your career in finance if we could, and some of what happened to you as a consequence of it. One thing no one will argue about is that although you didn't invent junk bonds, your use of them did create a revolution on Wall Street. What do you see as your lasting achievement?

A: What I accomplished was to change the flow of capital to those people that had ability rather than those people who were born with money or worked for large companies. My ability was to see the relationships of different parts of society and to try to figure out where value lies and how to finance it.

Q: In the last year have you gained any new understanding of who you were 10 years ago?

A: I knew who I was 10 years ago and I know who I am now. Consistently, I've always felt the best investor was the social scientist. I was focused on letting people feel they had a chance to participate. And I think I was very successful in doing that. My other feeling was that many of the ills of society will never be taken care of effectively unless people have a job.

Q: Those are noble sentiments. But many of your clients -- Ronald Perelman, Saul Steinberg, Asher Edelman, to name but a few -- were raiders. Their business -- and yours -- was hostile takeovers.A: You used the word "raiders." What is a raider? Nelson Peltz was defined as a raider. Why? He made a higher offer. If you wanted to go buy a painting at an auction tomorrow and my assistant Katie was willing to make a higher offer, does that make her a raider? G.E. has just made an offer for the Kemper Corporation. Are they raiders?

Q: But there is a social cost to those decisions -- jobs were lost, pensions too. So how can you talk about creating jobs?

A: You're talking about things that are totally false.

Q: Well, then correct me.

A: You're talking about millions of jobs that were created in the last two decades. All the net jobs created by quote, "junk" companies. Raiders didn't eliminate jobs in America. What cost jobs were the companies that didn't improve their businesses.

Q: You feel you've been unjustly portrayed. But what should we say about Michael Milken? Do we say that he was someone who worked at Drexel Burnham Lambert and provided financing for companies? Do we say that he's someone who --

A: Who went to prison camp?

Q: Who pleaded guilty?

A: My view is that you have to take a longer view. Let history be the judge.

Q: Why did you decide to plead guilty? Your wife, your friends even your brother advised against it.

A: That's probably too broad a statement. We had a vote in the family and it wasn't 100 percent. The question was, "How do you get this behind you?" There were so many misconceptions that I felt I had to find a way to end the situation. Today I feel that was the correct decision.

Q: As part of your plea bargain, the prosecutors wanted you to make certain admissions of guilt. You told the court that "certain of our transactions [with arbitrageur Ivan Boesky] involved reciprocal accommodations, some of which violated the law." What does that mean?

A: I engaged in what one would consider a normal business contact, that no one thought was criminal. Since then many firms have signed consent decrees for similar activities, many of them involving far more dollars and more securities. And those consent decrees did not bar anyone from the industry as a penalty. There were no fines. No companies were put out of business.

 Q: But are you saying that these were not crimes?A: I've never said that. I said they were wrong. But I don't think anyone knew.

Q: Let me read you a quote from Robert Sobel's book "Dangerous Dreamers": "What Milken's defenders and critics alike have ignored is the crucial element of motivation. What prompted him to take the chances he did? Why would a person of such talents, imagination and wealth assume such risks?" And then he quotes from "Howards End": "Why do people who have enough money try to get more money?"

A: Money had nothing to do with my motivation. I think the issue is passion. Do you have a passion for something? And as I see it, wealth is really a byproduct of creating something of value.

Q: That brings us to the $550 million question. Why should anyone make that much money in one year, as you did in the mid-80's?

A: We received a percentage of the profits. In 1986, the profits of my department approached $2 billion. The percentage we received was about two-thirds of what you would have received at other Wall Street firms. Compensation is a byproduct of investing your money.

Q: Why didn't you take your case seriously?

A: I knew I had not been involved in insider trading. If Ivan Boesky was involved in insider trading, it wasn't with me. I knew I paid my taxes. I even paid my maid's Social Security -- not doing so is against the law -- but I haven't seen too many people prosecuted for that.

Q: What about prison? Were you terrified? Was entering prison your lowest point?

A: I don't consider it my lowest point at all. Was it frightening? No. I viewed it as, "How are you going to get this thing behind you?" Taking out the trash isn't demeaning. Scrubbing the floor isn't demeaning. Making a caricature of me and my ideas and beliefs, that's pretty demeaning. The worst part was the separation from family and from the feeling that I could do something constructive.

Q: You were banned from the securities industry for life. Do you miss being in your business?

A: Not at all. By 1986 I was really focused on foreign countries, their debt, real estate. I was very involved in education. I was moving away from being involved in day-to-day trading.

Q: Do people still call to ask you for favors?

A: It occurred in prison constantly. When I talked to people on the phone, they'd all be asking me for favors. You know, Mike, I'm sorry about what happened to you -- but could you get me in this hotel? Or I have this problem, could you give me your advice? Or could you help my daughter or son get a job? That has never stopped, even today.

Q: You are uniquely positioned to comment on health care -- as a patient, as a financier, as someone hoping to finance a cure for prostate cancer. What should the Administration do about health care costs?

A: The 10 largest pharmaceutical companies have lost collectively $60 billion in market value in the last year and a half. People are cutting research and freezing hiring, and the potential for breakthrough research is being limited. But I believe research is the best way to reduce health care costs. In other words, if you could eliminate 10,000 surgeries a year at $8,000 a surgery, that's $80 million. If you don't invest in research you're going to have an escalation of health care costs, not a decrease.

Q: I keep trying to find ways that your recent experience has changed you. Clearly, not wearing the toupee is a sign that you're a different person.

A: I didn't view it as a cover-up before, and I don't view it as an uncovering today. It became a way of personally attacking me. But being a patient means giving up enormous personal control, dignity, privacy.

Q: What happens to you now?A: I'm at a crossroads. In the two hours that we're talking today, eight men will die of prostate cancer in the United States. Every day, your body produces cancer cells. In the normal person your immune system is effectively dealing with them. So why would a body produce cancer cells that your immune system does not deal with? I remember I gave a talk in the temple when I was 13 or 14, and my theory was that God was within you. There is this inner strength you focus to get your immune system going. My point is that I've got to help myself. Today I'm living with cancer rather than dying of cancer.

Q: Although people often characterize you as the embodiment of the 80's, you sound very much like a personification of the 60's: you want to change the world. At the same time, you also have the naivete associated with the 60's.

A: That's the romanticism of growing up in California. The romanticism that what is right will, in the end, turn out to be true; that you can solve any problem and that if you have cancer, it's not a death sentence.

Q: Even if everything you publish doesn't change people's perceptions, for whatever reasons, can you live with people forever calling Mike Milken the junk-bond king?

A: I believe the truth comes out. Someday, they're going to invent a time machine and be able to go back and look at the trading desk and see what Mike was actually doing, and what he wasn't doing. But my first goal is to make sure I have a natural course of life.

Q: And if you only have a year left?

A: I can't even contemplate that. No matter what happens, I'm just not going to lie down and not put up a fight. Everything else will take care of itself.

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A version of this article appears in print on June 5, 1994, Section 6, Page 34 of the National edition with the headline: Fighting a Hostile Takeover; Michael Milken. Order Reprints | Today’s Paper | Subscribe

From <https://www.nytimes.com/1994/06/05/magazine/fighting-a-hostile-takeover-michael-milken.html>

The Network of Junk Bond Financiers

Benjamin Stein, License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation

From <https://www.sjsu.edu/faculty/watkins/junkbonds.htm>

Meshulam Riklis (Rapid-American)

Riklis is a man of flamboyance and some mystery. He immigrated from Israel to Minnesota about 1947. There were conflicting stories of his early life. Some said he was originally Hungarian, others that he grew up in Turkey, others that he fought against Rommel in North Africa. Riklis is apparently the source of all these stories. In Minneapolis-St. Paul he worked as a stock broker and became famous for his aggressiveness. Later he organized a group of investors to acquire two printing companies, Rapid Electro-type and American Colortype, which became his major vehicle for "wheeling and dealing," Rapid-American. In the late 1950's Riklis used Rapid-American to acquire many small and medium-sized firms. In most cases he acquired these companies paying little or no cash. He traded exotic kinds of securities, such as high-paying preferred stock, high-yield bonds, and convertible bonds. These securities are sometimes called "Chinese money" because they were used by another innovative financier named James Ling. Ling was not Chinese but his name appeared to be, hence the name Chinese money.

In 1967 Riklis began a campaign to acquire Schenley Industries, the distributor of Dewar's White Label Scotch Whiskey and other popular brands of liquor. Riklis fought off competing offers and finally gained control. The takeover involved paying the Rosenstiel family (who held controlling interest in Schenley) a premium in cash for their shares and giving the other stockholders a much lower amount not in cash but in junk bonds. Riklis pioneered the type of takeovers that KKR and Michael Milken carried out later. Riklis asserted that he never paid off a bond issue except with another bond issue. Riklis' bonds were not in good repute and there was a history of defaults.

Riklis later acquired the Riviera Hotel, a casino in Los Vegas. Riklis was accused of draining funds from some of his acquisitions, driving them into bankruptcy.

Riklis is also famous for being the husband of Pia Zadora, a beautiful model who made a few movies and adorned the pages of Playboy Magazine.

Milken and Riklis made acquaintance once Drexel Burnham junk bond operation became important. Riklis was very interested in Milken creating a secondary market for Riklis' low grade securities. It was getting more difficult to find someone who would take Riklis' bonds in trade for stock because they were so illiquid.

Carl Lindner ( American Financial Corporation)

Carl Lindner and his brother Robert used their family's dairy business to build a chain of convenience stores in Cincinnati, Ohio. From there they went into the financial and communications fields. Through their holding company American Financial Corporation (AFC) they control Great America Insurance, a holding company for a group of property and life insurance companies that constitute the twenty third largest insurer in the country. AFC owns the fourth-largest bank in Cincinnati and the second-largest savings and loan. The Lindners also control seventy shopping centers around Cincinnati. They once owned Bantam Books and the major newspaper of Cincinnati, the Cincinnati Enquirer. Charles Keating, also of Cincinnati, was a close friend and colleague of the Lindners.

Carl Lindner also had major investments in United Brands (formerly known as United Fruit), Gulf + Western (now Paramount Communications), Warner Communications, Kroger (a major supermarket chain in the eastern U.S.), and Penn Central.

Whereas the Lindner companies and financial institutions once operated on conservative, cautious principles they later became involved in riskier ventures. Lindner insurance companies began to invest in junk bonds and other Lindner companies began to issue junk bonds. The SEC noted that Lindner companies were the single largest filers of new issues of securities in the U.S. Lindner was repeatedly accused of self-dealing in the corporations under his control; e.g. having such a corporation give him a private aircraft. He became closely associated with Milken and the others in the junk bond field to the extent that his financial institutions invested in the junk bonds of of the others. He, like some the others, actively enraged in public relations efforts to present an image of fiscal propriety to the general public.

Victor Posner ( Sharon Steel)

Posner was raised in Baltimore, worked in his father's dry goods store, and early went into real estate. He was said to be a major slumlord in Baltimore, but retired to Miami Beach in his forties. He came out of retirement, perhaps because of threatened takeovers of companies he held. He acquired a number of smaller companies and then he managed, through the use of leverage, to gain control of the reputable manufacturing firm of Sharon Steel. Posner drew salaries from the companies he controlled to the extent that he was the highest paid corporate executive in the U.S. during the late 1960's and early 1970's.

Posner used bizarre forms of notes and stock, which he sold to institutional investors, to carry out the acquisition of substantial shares of companies such as Southeastern Public Service, National Propane, and a clothing maker Wilson Brothers. But the illiquidity of Posner's securities was becoming a serious problem. When Posner took over Sharon Steel he arranged for the employee pension fund to sell off its blue chip portfolio and invest in the junk bonds Posner had used to acquire other companies.

He was sued by the SEC for diverting funds from the public corporations he controlled to members of his family. Posner developed a philosophy of unconcern about such suits; if he had good enough lawyers he didn't need to worry. The lawyers, of course, would be paid for by the corporations he controlled.

In 1988 Sharon Steel went into bankruptcy.

Saul Steinberg (Leasco, Reliance)

Saul Steinberg at a very young age decided he wanted a career in finance. He managed to attend the Wharton School of Business while only an undergraduate and wrote a senior paper on the profit opportunities in computer leasing. IBM had had a policy of not selling computers but only leasing them. This policy was challenged by the Justice Department and IBM started to sell computers as well as lease them. In setting the lease rate IBM used a depreciable life of only four years. Steinberg realized that if the computers were depreciated over a longer period, say eight years, he could charge a far lower fee than IBM. The period for depreciation was not dictated by the physical life. The computers could easily become obsolete long before they wore out. Steinberg set up a company Leasco to carry out such a leasing operation. He tried to write the leasing contract so that the leasees would have to pay even if their leased computer became technically obsolete before the end of the lease contract. He further contracted for insurance against nonpayment on the lease. On the basis of such iron-clad leases Steinberg borrowed money to finance the purchase of computers. Furthermore, the accounting system put the present value of the lease payment on the books at the time the contract was signed. The accounting profit of Leasco looked quite impressive and the theory of the operation was acceptable to the financial world. The stock in Leasco traded at a price/earnings ratio of about fifty to one. With this inflated stock and a reputation as a financial wizard Steinberg was able to acquire many other companies, companies that were more conservatively valued.

In this way he acquired a very large insurance company Reliance in 1968 before he was thirty years of age. By the time the market had shown that the idea behind Leasco was not as solid as it seemed, Steinberg had acquired enough holdings and cash that his financial positions was only mildly affected. In 1969 he attempted a takeover of Chase Bank of Manhattan. The Rockefellers and the rest of the Establishment fought to prevent him from taking it over.

Like Riklis, Lindner, and Posner, Steinberg was often accused of self-dealing in the corporations that he came to control. His ex-wife charged that he used corporation money to renovate his apartment and to buy a jet aircraft.

By now Steinberg had learned that he could make money even from an unsuccessful takeover. After acquiring a substantial block of stock in a company he could demand "green mail;" i.e., pressure the company board of directors to pay a higher price for his stock than the general public could get. His acquaintance with Michael Milken gave him the clot to threaten companies with takeovers.

Laurence Tisch (Lorillard)

Laurence Tisch graduated with honors from New York University and went on to get his MBA at Wharton. After graduation Tisch served for three years during World War II in the Office of Strategic Services, which later became the CIA. After the war he joined his family in renovating old hotels. His family was a quite interesting one. His father had been an All-American basketball player. In contrast to the other members of the network of junk bond financiers there was no seediness or underhandedness involved in his or his families operations.

One major acquisition of the Tisch family was Loew's, a theater chain. In 1968 the Tisch family acquired the cigaret manufacture P. Lorillard, the makers of Kent cigarets. These companies were acquired with securities that were subsequently proving to be illiquid. This was putting the damper on any further acquisitions by Tisch. Milken's junk bond operations were important in providing liquidity to the junk bond market.

In 1974 Tisch gained control of a Chicago insurance holding company, CNA Financial using some cash and a lot of securities. This gave Tisch control over a large amount of investment funds. The cost of acquisition of an insurance company is the equity in the company, but the funds held are many times this equity. Tisch is now chairman of the network CBS.

A social note: A niece of Laurence Tisch married the son of Saul Steinberg in a wedding in which the flowers alone cost one million dollars.

Fred Carr (First Executive)

Fred Carr was the son of an immigrant from Hungary who established a produce business in New York City. Later the family moved to Los Angles where Fred grew up and attended Cal State Los Angeles. He drove a truck and started his own driveway repair business to help put himself through college. By his early twenties he was trading in the stock market. Later he founded a very successful mutual fund called the Enterprise Fund. In two years the funds under his management rose from $20 million to $800 million. He was usually at the top of the list of high gain performers in the mutual fund field. However, there were charges that he drifted from the straight and narrow; e.g. buying unregistered "letter" stock and reselling it to others without registering it. By 1970 he had lost his touch and Enterprise Fund ranked 339th out of 379 mutual funds in performance. He abruptly left the Enterprise Fund and SEC temporarily shut it down because of irregularities and chaos in the record keeping. It later reopened under the direction of Gerald Tsai.

In 1974 Fred Carr was asked to run financially troubled First Executive Insurance. Carr went to Michael Milken to get funds to stave off collapse and started marketing a new product called Single Premium Deferred Annuity. A buyer makes a payment now and starts receiving annuity payments a specified number of years in the future. This is great for an insurance company's cash flow in the immediate future. In return for the help Milken gave, Carr agreed to market junk bonds through First Executive.

The Single Payment Deferred Annuities (SPDA's) were a great success. First Executive had a total of $700 million of policies of all kinds when Fred Carr took control in 1974. By 1979 it was selling $1 billion worth of SPDA's each year. Saul Steinberg bought stock in First Executive and by 1981 had become the largest stockholder. First Executive began selling annuities to corporations linked to Milken to "refinance" their pension plans. The pension plans were declared "overfunded" and the assets sold off to be replaced by annuity contracts from Carr's First Executive. The contracts used in this refinancing were called "guaranteed investment contracts" (GIC's). The companies which bought these GIC's could count them as investment-grade bonds even though they were simply packages ofjunk bonds which First Executive guaranteed. By 1990 Carr's First Executives had $5 billion of GIC's outstanding. Institutions that otherwise would not have been able to hold junk bonds were allowed to once they were packaged and labeled as GIC's by virtue of First Executive's guarantee.

By the end of the 1980's First Executive was buying $2.5 billion of Drexel junk bonds each year. Furthermore, once First Executive had purchased a bond issue it gave those bonds a stamp of quality as being held by a major insurance company. Milken could also use First Executive as an example when trying to sell junk bonds to other insurance companies. Although there were other insurance companies which became important markets for Milken, Fred Carr was by far the most important player in Milken's junk bond game. First Executive had a representative at Drexel who bought anything Milken told him to, no questions asked. Milken and Carr also set up reinsurance firms together.

In 1980 insurance purchased about $22 billion in corporate bonds, by 1988 they were buying $180 billion.

The Savings and Loan Industry

The Savings and Loans were in difficulty long before Michael Milken came onto the American financial scene. Originally S&L's were restricted to holding mortgages on real estate. This restricted S&L's competitiveness with respect to bank which were not so restricted. But the interest rates that banks and S&L's could pay on deposits were regulated so S&L's did not have to match banks in a bidding contest on interest rates. During the 1970's inflation rates went up and interest rates followed. This was especially hard on S&L's, which had their assets tied up in long term mortgages paying low interest rates but had to pay high current rates to keep depositors. Fundamentally at that stage the S&L's became bankrupt, but every one wanted to postpone the inevitable. The government's actions in trying to stave off the bankruptcy of the S&L's turned a bad situation into a disasterous one. The Garn-St. Germain Act of 1982 removed most of the restrictions on what S&L's could hold. From 1982 they could hold stocks, bonds, real estate, and commercial loans as well as mortgages. But at the same time that the restrictions on what S&L's could hold were removed, the interest rates restrictions for banks were also removed. Nevertheless the Federal Government continued to insure S&L deposits. Depositors did not have to concern themselves about the safety of an S&L. S&L's were another financial institution, like insurance companies, where a relatively small investment in equity gave the buyer control over a much larger amount of investible assets. The purchase of an S&L with a billion dollars worth of assets might require only $30 million to buy up its equity. Within months of the passage of Garn-St. Germain members of Milken's circle were taking over S&L's using Drexel junk bond money. The S&L's then became major markets for junk bonds. A $30 million outlay for a S&L could easily lead to the sale of $500 million of junk bonds by Drexel for which it would charge a commission of $20 million. Some of the S&L's taken over by friends of Milken were:

• 1. Imperial in San Diego (Saul Steinberg)

• 2. CenTrust in Miami (David Paul)

• 3. Gibraltar in Beverly Hills

• 4. City Fed in New Jersey

• 5. Ben Franklin in Texas

• 6. Lincoln Savings (Charles Keating)

Other S&L's, such as Columbia Savings in Beverly Hills under the direction of Tom Spiegel, joined the circle of junk bond buyers. By 1989 Columbia S&L had bought $10 billion in junk bonds. Spiegel's compensation for running Columbia was spectacular, $9 million in 1985. In addition, Milken let Spiegel in on some opportunities for spectacular capital gains, and, allegedly, for trading on insider information. By the late 1980's most of these S&L's were siezed by state or federal regulatory agencies.

Enstar

In 1969 Perry Mendel, a developer in Montgomery, Alabama, decided to use some of his real estate to create a chain of day-care centers. Mendel brought in another Montgomery businessman, Richard Greengrass, to help him carry out his plan. The centers, called Kinder-Care, were a success and by 1987 employed 17 thousand people in 12 thousand centers. The gross revenue was $900 million with operating profits of $75 million (but a net profit of only $6 million).

In 1978 Mendel and Greengrass went to Milken to raise some capital. Milken convinced them to raise much more than they originally intended. They not only expanded Kinder-Care and bought up another chain, Sylvan Learning Centers, and expanded it, but also bought up an insurance company Pioneer Western. A few months later they bought CenterBanc, an S&L, in Florida. And then, they acquired American S&L in Miami. Mendel and Greengrass renamed their company Enstar. In the course of about 18 months a chain of day-care centers had been converted into a $3 billion banking and insurance company. This transformation had been financed by Drexel junk bonds, but strangely Enstar also bought $650 million in junk bonds. Enstar helped Milken finance the takeover Safeway, Revlon, and Gillette. In return, Milken let Mendel and Greengrass in on some very lucrative investments. The deals got shadier and shadier, and in 1991 Mendel and Greengrass were convicted of fraud by a federal court. Here is an example of one of their more outrageous ploys. Enstar sold the Kinder-Care portion of the company. In the selloff, Mendel and Greengrass told the Kinder-Care stockholders that they were giving them the day-care centers. They then announced that the IRS had objected to this transaction so the Kinder-Care stockholders would have to pay $4.75 per share to receive what they already owned. There had been no IRS objection.

The Default Rate on Junk Bonds

The Milken organization claimed the default rate on their high yield securities was only one percent. Critics claim the default was more like three or four percent. At this higher rate, junk bonds give a lower return than Treasury bills and no one would knowingly buy them. By 1983 there were hundreds of millions of dollars of junk bonds which had flatly defaulted. There were other cases where the default was concealed as an "exchange;" i.e., the bond was supposed to pay interest in cash but instead gave "stock" or "zero-coupon convertible bonds" or "payment-in-kind bonds" in lieu of interest.

The junk bonds market could have collapsed in the mid-1980's under the burden of the defaults and effective defaults, but Milken got a lucky break. Edward Altman of the Business School of New York University was hired by Morgan Stanley, the most pretigious investment bank in the U.S., to do research on the default rate on junk bonds. Morgan Stanley wanted to enter the obviously lucrative field of marketing original issue junk bonds. It made the mistaken presumption that Drexel's position in the field was based upon knowledge and research when, in fact, it was, in Benjamin Stein's words, based "upon years of mutual backscratching in the back alleys of finance." Altman computed the ratio of the face value of the bonds that actually defaulted in a given year to the total face value of bonds in existence in that year. Although this procedure might seem reasonable, it did not allow for the tremendous growth in junk bonds over the period. Suppose all of the junk bond issues default after five years. This would be a 100 percent default rate. But if the first year there is $100 million issued and the amount doubles each year then this would be the record Altman's method would show:

A default rate of around 3 percent and declining looks a lot better than the actual 100 percent rate. Altman did not count the default-equivalents of giving "securities" in lieu of money for the interest payments as defaults. Altman concluded that the default rate on junk bonds was between 1 and 1.5 percent in most years, and through Morgan Stanley this value was publicized. Drexel, of course, gave this estimate of the default rate further publicity. This erroneous figure was accepted because of the academic credentials of Altman and the prestige of Morgan Stanley. Altman studied all bonds with a rating below investment grade. This lumped together "fallen angels" with Milken junk bonds. He also made the unjustified assumption that the residual value of defaulted Milken junk bonds was the same as that of "fallen angels"; i.e., thirty five to forty percent. Despite these and other major flaws, Altman's studies were accepted by various institutions, including the U.S. government, as vindicating investment in the junk bond market.

In 1988 a team of financial analysts at Harvard University under the direction of Paul Asquith undertood a study of junk bonds. In contrast to Altman they focused on the default rates of bonds over the bonds lifetimes. They concluded, "Buying and holding all [junk] bonds issued in 1978 and 1979 produces cumulative default rates exceeding 34% by November 1, 1988...Cumulative default rates rise markedly as the time since issue increases and are 0-8% three years after issue, increase to 18% to 26% seven years after issue ... and exceed 34% eleven years after issue."

Instead of a one percent default rate per year the Asquith group found an average default rate of about 3.4 percent per year. At this default rate junk bonds were a poor investment and it was foolish and irresponsible for insurance companies, pension funds, banks and S&L's to hold them.

Michael Milken

Michael Milken was born in the Los Angeles area and grew up on the border between Encino and Van Nuys. His father was a very industrious man who was an orphan and worked his way through college in Wisconsin to become an accountant. Michael and his younger brother Lowell were good sons, helping their parents where they could and excelling in school and sports. Michael played varsity basketball in highschool and was the head cheerleader in other sports. He did his undergraduate work in business at UC-Berkeley during the period 1964 to 1968. While other students were indulging in the radicalism of the 1960's Michael was studying accounting and economics. It was at Berkeley that he discovered the work of Walter Braddock Hickman, entitled Corporate Bond Quality and Investor Experience, on the bond market from 1900 to 1943. Hickman did find that by some measurement the average yield on the lower quality bonds was higher than that of the higher quality bonds but not by very much. Milken exaggerated this difference and chose not to allow for the special effects the Great Depression of the 1930's and World War II had on the bond market. The Depression severely depressed bond prices so that any bonds bought at the depths of the Depression showed extraordinary gains. World War II and the Federal Government's creation of a managed economy meant there were no defaults on bonds during the war years.

Milken graduated in 1968 as a Phi Beta Kappa with a degree in business administration. After graduation Milken married and moved to Philadelphia to go to the Wharton School of Business at the University of Pennsylvania. While pursuing his regular coursework (reportedly with straight A's) he continued to investigate whether or not the bond market was pricing bonds of different risks efficiently. He left Wharton in 1969 to go to work for Drexel and three years later completed his MBA thesis. It was entitled, "Managing the Corporate Financial Structure." Stein characterizes it as, "an stonishing mishmash of basic, obvious facts," and "a lot of bluster to prove something everyone already knows."

At Drexel, later to become Drexel Burnham, Milken made contact with a number of prominent wheeler-dealers, such as Meshulam Riklis of Rapid-American and McCrory, Lawrence Tisch of Lorillard, and Carl Lindner of American Continental. Stein gives summaries of the careers of these financiers and others who became important to Milken in his career.

Sources:

Benjamin Stein, License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation

From <https://www.sjsu.edu/faculty/watkins/junkbonds.htm>

The Network of Junk Bond Financiers

Benjamin Stein, License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation

From <https://www.sjsu.edu/faculty/watkins/junkbonds.htm>

Meshulam Riklis (Rapid-American)

Riklis is a man of flamboyance and some mystery. He immigrated from Israel to Minnesota about 1947. There were conflicting stories of his early life. Some said he was originally Hungarian, others that he grew up in Turkey, others that he fought against Rommel in North Africa. Riklis is apparently the source of all these stories. In Minneapolis-St. Paul he worked as a stock broker and became famous for his aggressiveness. Later he organized a group of investors to acquire two printing companies, Rapid Electro-type and American Colortype, which became his major vehicle for "wheeling and dealing," Rapid-American. In the late 1950's Riklis used Rapid-American to acquire many small and medium-sized firms. In most cases he acquired these companies paying little or no cash. He traded exotic kinds of securities, such as high-paying preferred stock, high-yield bonds, and convertible bonds. These securities are sometimes called "Chinese money" because they were used by another innovative financier named James Ling. Ling was not Chinese but his name appeared to be, hence the name Chinese money.

In 1967 Riklis began a campaign to acquire Schenley Industries, the distributor of Dewar's White Label Scotch Whiskey and other popular brands of liquor. Riklis fought off competing offers and finally gained control. The takeover involved paying the Rosenstiel family (who held controlling interest in Schenley) a premium in cash for their shares and giving the other stockholders a much lower amount not in cash but in junk bonds. Riklis pioneered the type of takeovers that KKR and Michael Milken carried out later. Riklis asserted that he never paid off a bond issue except with another bond issue. Riklis' bonds were not in good repute and there was a history of defaults.

Riklis later acquired the Riviera Hotel, a casino in Los Vegas. Riklis was accused of draining funds from some of his acquisitions, driving them into bankruptcy.

Riklis is also famous for being the husband of Pia Zadora, a beautiful model who made a few movies and adorned the pages of Playboy Magazine.

Milken and Riklis made acquaintance once Drexel Burnham junk bond operation became important. Riklis was very interested in Milken creating a secondary market for Riklis' low grade securities. It was getting more difficult to find someone who would take Riklis' bonds in trade for stock because they were so illiquid.

Carl Lindner ( American Financial Corporation)

Carl Lindner and his brother Robert used their family's dairy business to build a chain of convenience stores in Cincinnati, Ohio. From there they went into the financial and communications fields. Through their holding company American Financial Corporation (AFC) they control Great America Insurance, a holding company for a group of property and life insurance companies that constitute the twenty third largest insurer in the country. AFC owns the fourth-largest bank in Cincinnati and the second-largest savings and loan. The Lindners also control seventy shopping centers around Cincinnati. They once owned Bantam Books and the major newspaper of Cincinnati, the Cincinnati Enquirer. Charles Keating, also of Cincinnati, was a close friend and colleague of the Lindners.

Carl Lindner also had major investments in United Brands (formerly known as United Fruit), Gulf + Western (now Paramount Communications), Warner Communications, Kroger (a major supermarket chain in the eastern U.S.), and Penn Central.

Whereas the Lindner companies and financial institutions once operated on conservative, cautious principles they later became involved in riskier ventures. Lindner insurance companies began to invest in junk bonds and other Lindner companies began to issue junk bonds. The SEC noted that Lindner companies were the single largest filers of new issues of securities in the U.S. Lindner was repeatedly accused of self-dealing in the corporations under his control; e.g. having such a corporation give him a private aircraft. He became closely associated with Milken and the others in the junk bond field to the extent that his financial institutions invested in the junk bonds of of the others. He, like some the others, actively enraged in public relations efforts to present an image of fiscal propriety to the general public.

Victor Posner ( Sharon Steel)

Posner was raised in Baltimore, worked in his father's dry goods store, and early went into real estate. He was said to be a major slumlord in Baltimore, but retired to Miami Beach in his forties. He came out of retirement, perhaps because of threatened takeovers of companies he held. He acquired a number of smaller companies and then he managed, through the use of leverage, to gain control of the reputable manufacturing firm of Sharon Steel. Posner drew salaries from the companies he controlled to the extent that he was the highest paid corporate executive in the U.S. during the late 1960's and early 1970's.

Posner used bizarre forms of notes and stock, which he sold to institutional investors, to carry out the acquisition of substantial shares of companies such as Southeastern Public Service, National Propane, and a clothing maker Wilson Brothers. But the illiquidity of Posner's securities was becoming a serious problem. When Posner took over Sharon Steel he arranged for the employee pension fund to sell off its blue chip portfolio and invest in the junk bonds Posner had used to acquire other companies.

He was sued by the SEC for diverting funds from the public corporations he controlled to members of his family. Posner developed a philosophy of unconcern about such suits; if he had good enough lawyers he didn't need to worry. The lawyers, of course, would be paid for by the corporations he controlled.

In 1988 Sharon Steel went into bankruptcy.

Saul Steinberg (Leasco, Reliance)

Saul Steinberg at a very young age decided he wanted a career in finance. He managed to attend the Wharton School of Business while only an undergraduate and wrote a senior paper on the profit opportunities in computer leasing. IBM had had a policy of not selling computers but only leasing them. This policy was challenged by the Justice Department and IBM started to sell computers as well as lease them. In setting the lease rate IBM used a depreciable life of only four years. Steinberg realized that if the computers were depreciated over a longer period, say eight years, he could charge a far lower fee than IBM. The period for depreciation was not dictated by the physical life. The computers could easily become obsolete long before they wore out. Steinberg set up a company Leasco to carry out such a leasing operation. He tried to write the leasing contract so that the leasees would have to pay even if their leased computer became technically obsolete before the end of the lease contract. He further contracted for insurance against nonpayment on the lease. On the basis of such iron-clad leases Steinberg borrowed money to finance the purchase of computers. Furthermore, the accounting system put the present value of the lease payment on the books at the time the contract was signed. The accounting profit of Leasco looked quite impressive and the theory of the operation was acceptable to the financial world. The stock in Leasco traded at a price/earnings ratio of about fifty to one. With this inflated stock and a reputation as a financial wizard Steinberg was able to acquire many other companies, companies that were more conservatively valued.

In this way he acquired a very large insurance company Reliance in 1968 before he was thirty years of age. By the time the market had shown that the idea behind Leasco was not as solid as it seemed, Steinberg had acquired enough holdings and cash that his financial positions was only mildly affected. In 1969 he attempted a takeover of Chase Bank of Manhattan. The Rockefellers and the rest of the Establishment fought to prevent him from taking it over.

Like Riklis, Lindner, and Posner, Steinberg was often accused of self-dealing in the corporations that he came to control. His ex-wife charged that he used corporation money to renovate his apartment and to buy a jet aircraft.

By now Steinberg had learned that he could make money even from an unsuccessful takeover. After acquiring a substantial block of stock in a company he could demand "green mail;" i.e., pressure the company board of directors to pay a higher price for his stock than the general public could get. His acquaintance with Michael Milken gave him the clot to threaten companies with takeovers.

Laurence Tisch (Lorillard)

Laurence Tisch graduated with honors from New York University and went on to get his MBA at Wharton. After graduation Tisch served for three years during World War II in the Office of Strategic Services, which later became the CIA. After the war he joined his family in renovating old hotels. His family was a quite interesting one. His father had been an All-American basketball player. In contrast to the other members of the network of junk bond financiers there was no seediness or underhandedness involved in his or his families operations.

One major acquisition of the Tisch family was Loew's, a theater chain. In 1968 the Tisch family acquired the cigaret manufacture P. Lorillard, the makers of Kent cigarets. These companies were acquired with securities that were subsequently proving to be illiquid. This was putting the damper on any further acquisitions by Tisch. Milken's junk bond operations were important in providing liquidity to the junk bond market.

In 1974 Tisch gained control of a Chicago insurance holding company, CNA Financial using some cash and a lot of securities. This gave Tisch control over a large amount of investment funds. The cost of acquisition of an insurance company is the equity in the company, but the funds held are many times this equity. Tisch is now chairman of the network CBS.

A social note: A niece of Laurence Tisch married the son of Saul Steinberg in a wedding in which the flowers alone cost one million dollars.

Fred Carr (First Executive)

Fred Carr was the son of an immigrant from Hungary who established a produce business in New York City. Later the family moved to Los Angles where Fred grew up and attended Cal State Los Angeles. He drove a truck and started his own driveway repair business to help put himself through college. By his early twenties he was trading in the stock market. Later he founded a very successful mutual fund called the Enterprise Fund. In two years the funds under his management rose from $20 million to $800 million. He was usually at the top of the list of high gain performers in the mutual fund field. However, there were charges that he drifted from the straight and narrow; e.g. buying unregistered "letter" stock and reselling it to others without registering it. By 1970 he had lost his touch and Enterprise Fund ranked 339th out of 379 mutual funds in performance. He abruptly left the Enterprise Fund and SEC temporarily shut it down because of irregularities and chaos in the record keeping. It later reopened under the direction of Gerald Tsai.

In 1974 Fred Carr was asked to run financially troubled First Executive Insurance. Carr went to Michael Milken to get funds to stave off collapse and started marketing a new product called Single Premium Deferred Annuity. A buyer makes a payment now and starts receiving annuity payments a specified number of years in the future. This is great for an insurance company's cash flow in the immediate future. In return for the help Milken gave, Carr agreed to market junk bonds through First Executive.

The Single Payment Deferred Annuities (SPDA's) were a great success. First Executive had a total of $700 million of policies of all kinds when Fred Carr took control in 1974. By 1979 it was selling $1 billion worth of SPDA's each year. Saul Steinberg bought stock in First Executive and by 1981 had become the largest stockholder. First Executive began selling annuities to corporations linked to Milken to "refinance" their pension plans. The pension plans were declared "overfunded" and the assets sold off to be replaced by annuity contracts from Carr's First Executive. The contracts used in this refinancing were called "guaranteed investment contracts" (GIC's). The companies which bought these GIC's could count them as investment-grade bonds even though they were simply packages ofjunk bonds which First Executive guaranteed. By 1990 Carr's First Executives had $5 billion of GIC's outstanding. Institutions that otherwise would not have been able to hold junk bonds were allowed to once they were packaged and labeled as GIC's by virtue of First Executive's guarantee.

By the end of the 1980's First Executive was buying $2.5 billion of Drexel junk bonds each year. Furthermore, once First Executive had purchased a bond issue it gave those bonds a stamp of quality as being held by a major insurance company. Milken could also use First Executive as an example when trying to sell junk bonds to other insurance companies. Although there were other insurance companies which became important markets for Milken, Fred Carr was by far the most important player in Milken's junk bond game. First Executive had a representative at Drexel who bought anything Milken told him to, no questions asked. Milken and Carr also set up reinsurance firms together.

In 1980 insurance purchased about $22 billion in corporate bonds, by 1988 they were buying $180 billion.

The Savings and Loan Industry

The Savings and Loans were in difficulty long before Michael Milken came onto the American financial scene. Originally S&L's were restricted to holding mortgages on real estate. This restricted S&L's competitiveness with respect to bank which were not so restricted. But the interest rates that banks and S&L's could pay on deposits were regulated so S&L's did not have to match banks in a bidding contest on interest rates. During the 1970's inflation rates went up and interest rates followed. This was especially hard on S&L's, which had their assets tied up in long term mortgages paying low interest rates but had to pay high current rates to keep depositors. Fundamentally at that stage the S&L's became bankrupt, but every one wanted to postpone the inevitable. The government's actions in trying to stave off the bankruptcy of the S&L's turned a bad situation into a disasterous one. The Garn-St. Germain Act of 1982 removed most of the restrictions on what S&L's could hold. From 1982 they could hold stocks, bonds, real estate, and commercial loans as well as mortgages. But at the same time that the restrictions on what S&L's could hold were removed, the interest rates restrictions for banks were also removed. Nevertheless the Federal Government continued to insure S&L deposits. Depositors did not have to concern themselves about the safety of an S&L. S&L's were another financial institution, like insurance companies, where a relatively small investment in equity gave the buyer control over a much larger amount of investible assets. The purchase of an S&L with a billion dollars worth of assets might require only $30 million to buy up its equity. Within months of the passage of Garn-St. Germain members of Milken's circle were taking over S&L's using Drexel junk bond money. The S&L's then became major markets for junk bonds. A $30 million outlay for a S&L could easily lead to the sale of $500 million of junk bonds by Drexel for which it would charge a commission of $20 million. Some of the S&L's taken over by friends of Milken were:

• 1. Imperial in San Diego (Saul Steinberg)

• 2. CenTrust in Miami (David Paul)

• 3. Gibraltar in Beverly Hills

• 4. City Fed in New Jersey

• 5. Ben Franklin in Texas

• 6. Lincoln Savings (Charles Keating)

Other S&L's, such as Columbia Savings in Beverly Hills under the direction of Tom Spiegel, joined the circle of junk bond buyers. By 1989 Columbia S&L had bought $10 billion in junk bonds. Spiegel's compensation for running Columbia was spectacular, $9 million in 1985. In addition, Milken let Spiegel in on some opportunities for spectacular capital gains, and, allegedly, for trading on insider information. By the late 1980's most of these S&L's were siezed by state or federal regulatory agencies.

Enstar

In 1969 Perry Mendel, a developer in Montgomery, Alabama, decided to use some of his real estate to create a chain of day-care centers. Mendel brought in another Montgomery businessman, Richard Greengrass, to help him carry out his plan. The centers, called Kinder-Care, were a success and by 1987 employed 17 thousand people in 12 thousand centers. The gross revenue was $900 million with operating profits of $75 million (but a net profit of only $6 million).

In 1978 Mendel and Greengrass went to Milken to raise some capital. Milken convinced them to raise much more than they originally intended. They not only expanded Kinder-Care and bought up another chain, Sylvan Learning Centers, and expanded it, but also bought up an insurance company Pioneer Western. A few months later they bought CenterBanc, an S&L, in Florida. And then, they acquired American S&L in Miami. Mendel and Greengrass renamed their company Enstar. In the course of about 18 months a chain of day-care centers had been converted into a $3 billion banking and insurance company. This transformation had been financed by Drexel junk bonds, but strangely Enstar also bought $650 million in junk bonds. Enstar helped Milken finance the takeover Safeway, Revlon, and Gillette. In return, Milken let Mendel and Greengrass in on some very lucrative investments. The deals got shadier and shadier, and in 1991 Mendel and Greengrass were convicted of fraud by a federal court. Here is an example of one of their more outrageous ploys. Enstar sold the Kinder-Care portion of the company. In the selloff, Mendel and Greengrass told the Kinder-Care stockholders that they were giving them the day-care centers. They then announced that the IRS had objected to this transaction so the Kinder-Care stockholders would have to pay $4.75 per share to receive what they already owned. There had been no IRS objection.

The Default Rate on Junk Bonds

The Milken organization claimed the default rate on their high yield securities was only one percent. Critics claim the default was more like three or four percent. At this higher rate, junk bonds give a lower return than Treasury bills and no one would knowingly buy them. By 1983 there were hundreds of millions of dollars of junk bonds which had flatly defaulted. There were other cases where the default was concealed as an "exchange;" i.e., the bond was supposed to pay interest in cash but instead gave "stock" or "zero-coupon convertible bonds" or "payment-in-kind bonds" in lieu of interest.

The junk bonds market could have collapsed in the mid-1980's under the burden of the defaults and effective defaults, but Milken got a lucky break. Edward Altman of the Business School of New York University was hired by Morgan Stanley, the most pretigious investment bank in the U.S., to do research on the default rate on junk bonds. Morgan Stanley wanted to enter the obviously lucrative field of marketing original issue junk bonds. It made the mistaken presumption that Drexel's position in the field was based upon knowledge and research when, in fact, it was, in Benjamin Stein's words, based "upon years of mutual backscratching in the back alleys of finance." Altman computed the ratio of the face value of the bonds that actually defaulted in a given year to the total face value of bonds in existence in that year. Although this procedure might seem reasonable, it did not allow for the tremendous growth in junk bonds over the period. Suppose all of the junk bond issues default after five years. This would be a 100 percent default rate. But if the first year there is $100 million issued and the amount doubles each year then this would be the record Altman's method would show:

A default rate of around 3 percent and declining looks a lot better than the actual 100 percent rate. Altman did not count the default-equivalents of giving "securities" in lieu of money for the interest payments as defaults. Altman concluded that the default rate on junk bonds was between 1 and 1.5 percent in most years, and through Morgan Stanley this value was publicized. Drexel, of course, gave this estimate of the default rate further publicity. This erroneous figure was accepted because of the academic credentials of Altman and the prestige of Morgan Stanley. Altman studied all bonds with a rating below investment grade. This lumped together "fallen angels" with Milken junk bonds. He also made the unjustified assumption that the residual value of defaulted Milken junk bonds was the same as that of "fallen angels"; i.e., thirty five to forty percent. Despite these and other major flaws, Altman's studies were accepted by various institutions, including the U.S. government, as vindicating investment in the junk bond market.

In 1988 a team of financial analysts at Harvard University under the direction of Paul Asquith undertood a study of junk bonds. In contrast to Altman they focused on the default rates of bonds over the bonds lifetimes. They concluded, "Buying and holding all [junk] bonds issued in 1978 and 1979 produces cumulative default rates exceeding 34% by November 1, 1988...Cumulative default rates rise markedly as the time since issue increases and are 0-8% three years after issue, increase to 18% to 26% seven years after issue ... and exceed 34% eleven years after issue."

Instead of a one percent default rate per year the Asquith group found an average default rate of about 3.4 percent per year. At this default rate junk bonds were a poor investment and it was foolish and irresponsible for insurance companies, pension funds, banks and S&L's to hold them.

Michael Milken

Michael Milken was born in the Los Angeles area and grew up on the border between Encino and Van Nuys. His father was a very industrious man who was an orphan and worked his way through college in Wisconsin to become an accountant. Michael and his younger brother Lowell were good sons, helping their parents where they could and excelling in school and sports. Michael played varsity basketball in highschool and was the head cheerleader in other sports. He did his undergraduate work in business at UC-Berkeley during the period 1964 to 1968. While other students were indulging in the radicalism of the 1960's Michael was studying accounting and economics. It was at Berkeley that he discovered the work of Walter Braddock Hickman, entitled Corporate Bond Quality and Investor Experience, on the bond market from 1900 to 1943. Hickman did find that by some measurement the average yield on the lower quality bonds was higher than that of the higher quality bonds but not by very much. Milken exaggerated this difference and chose not to allow for the special effects the Great Depression of the 1930's and World War II had on the bond market. The Depression severely depressed bond prices so that any bonds bought at the depths of the Depression showed extraordinary gains. World War II and the Federal Government's creation of a managed economy meant there were no defaults on bonds during the war years.

Milken graduated in 1968 as a Phi Beta Kappa with a degree in business administration. After graduation Milken married and moved to Philadelphia to go to the Wharton School of Business at the University of Pennsylvania. While pursuing his regular coursework (reportedly with straight A's) he continued to investigate whether or not the bond market was pricing bonds of different risks efficiently. He left Wharton in 1969 to go to work for Drexel and three years later completed his MBA thesis. It was entitled, "Managing the Corporate Financial Structure." Stein characterizes it as, "an stonishing mishmash of basic, obvious facts," and "a lot of bluster to prove something everyone already knows."

At Drexel, later to become Drexel Burnham, Milken made contact with a number of prominent wheeler-dealers, such as Meshulam Riklis of Rapid-American and McCrory, Lawrence Tisch of Lorillard, and Carl Lindner of American Continental. Stein gives summaries of the careers of these financiers and others who became important to Milken in his career.

Sources:

Benjamin Stein, License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation

From <https://www.sjsu.edu/faculty/watkins/junkbonds.htm>

Books of The Times; They Went For the Money, Piles of It

By Christopher Lehmann-Haupt

Oct. 28, 1991 New York Times

Den of Thieves By James B. Stewart Illustrated. 493 pages. Simon & Schuster. $25.

Aside from greed, what makes financial skulduggery possible is that few people really understand money. So it is James B. Stewart's singular accomplishment to have written, in "Den of Thieves," not only a morality play in which villains and heroes clash dramatically over money, but also a book about financial skulduggery that the average reader can easily comprehend.

A front-page editor of The Wall Street Journal, where he was co-winner of a Pulitzer Prize in 1988 for his reporting on the 1987 stock-market crash and the insider-trading scandal, Mr. Stewart achieves this dramatic clarity by neatly dividing his book into two sections: one on the crime of insider trading and the other on the punishment.

He begins by introducing his four main players in such lively circumstances that they jump off the page. There was Dennis B. Levine, a Baruch College graduate from Queens whose dream it was simply to beat the system any way he could. There was Martin A. Siegel, a specialist at defending companies against hostile takeovers who was drawn Macbeth-like to cheating simply to maintain his record as a winner.

There was Ivan F. Boesky, the eccentric arbitrager who turned his lower middle-class Detroit background into a myth of genteel breeding, and dreamed of transforming himself into a modern-day Rothschild. And there was Michael R. Milken, the Midas of Drexel Burnham Lambert, who turned high-yield bonds into a new form of money and then set about to gobble all of it up.

Not only does Mr. Stewart lend these people dimension, he also makes you root for them by showing how as Jews they were bucking a stodgy WASP Establishment that had always excluded them in the past.

Having introduced his characters, he next describes their most elementary peccadilloes, beginning with stock tips based on inside information that Dennis Levine passed on to friends and took advantage of himself through a Swiss bank in the Bahamas. From here the narrative ascends through ever more complex intrigues until it arrives at the mountaintop of million-dollar deals carried out by Michael Milken.

Finally comes Mr. Stewart's account of the punishment. It begins, symmetrically enough, with the Securities and Exchange Commission's discovery of a loose thread left exposed by Mr. Levine while trading in his offshore account. By following this thread the S.E.C. and United States Attorney Rudolph W. Giuliani succeeded in plea bargaining their way up the mountain until they reached Mr. Milken at the top.

Naturally such a summary oversimplifies the story. In the experience of reading "Den of Thieves," you feel ambivalently toward the so-called bad guys, who impress you variously as greedy pigs, well-meaning bumblers and men who lapsed into wrong in the hot pursuit of doing right. Nor do the nominal good guys always appear without fault. Mr. Stewart makes the men of the S.E.C. look overzealous and even vindictive. And in seeking to preserve Ivan Boesky's fortune, so that he could pay the $100 million penalty that his plea bargain called for, they appear to have indulged in insider trading as egregiously as anyone they investigated.

Moreover, by telling Dennis Levine's story in terms similar to Michael Milken's, Mr. Stewart appears to equate a grubby theft to a truly inspired attempt at financial alchemy. In fact Mr. Milken's case was a good deal more complex than Mr. Levine's, as even Mr. Stewart's somewhat ploddingly linear narrative makes clear. Unlike the others, all of whom were below him on the pyramid of plea bargainers, Mr. Milken had no one to expose and therefore nothing to bargain with, except the option of cutting short an expensive and time-consuming legal process.

Presumably to do so, the Government offered Mr. Milken a deal, which he accepted hours after the deadline: too late, the Government insisted. Eventually, Mr. Milken was offered a tougher deal. This time he accepted; it included an agreement to plead guilty to six felonies, among them "conspiracy with Boesky," as Mr. Stewart puts it, and "securities fraud." He was sentenced to 10 years in prison.

While contemplating these two plea offers, Mr. Milken accelerated a broad-gauged publicity campaign to convince the American public that his creation of the high-yield bond market had proved highly productive to the national economy, a campaign that has continued in various forms to the present day.

One mission of that campaign was to produce a book, eventually to be called "Portraits of the American Dream," which would feature company success stories that depended on Mr. Milken's bonds. "But no sooner would the writers finish a chapter on a company such as Ingersoll Communications," writes Mr. Stewart, "than the company would threaten to default." On the stage of American financial history, Mr. Milken kept getting the rug yanked from under him.

This may be amusing, but it is in passages like this that "Den of Thieves" achieves its significance. Though its narrative often bogs down by mixing up the apples of Mr. Levine's comparatively banal transgressions with the oranges of Mr. Milken's bold attempt to create a new form of value, this book finally poses certain important questions. Can the free market that the Reaganites dreamed of in the 1980's really create new forms of productivity? Or without stringent controls must such a market inevitably fall victim to scoundrels?

A version of this article appears in print on Oct. 28, 1991, Section C, Page 18 of the National edition with the headline: Books of The Times; They Went For the Money, Piles of It. Order Reprints | Today’s Paper | Subscribe

https://www.nytimes.com/1991/10/28/books/books-of-the-times-they-went-for-the-money-piles-of-it.html

Review: Adventures in the Junk Trade

By William Taylor

Nov. 15, 1992

From <https://www.nytimes.com/1992/11/15/books/adventures-in-the-junk-trade.html>

The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation. By Benjamin J. Stein. Illustrated. 219 pp. New York: Simon & Schuster. $23.

BENJAMIN J. STEIN, whose financial writing appears in Barron's and elsewhere, has a genuine gift for demystifying seamy Wall Street deals. He also knows his way around the darkest corners of Michael Milken's tattered empire. That combination makes much of "A License to Steal" a devastating indictment of junk bonds and the criminal misconduct surrounding their rise in the 1980's.

But Mr. Stein has written a frustrating book. He is so swept up in his contempt for Mr. Milken, so determined to tear away whatever shred of dignity still clings to the disgraced financier, that his book frequently turns from condemnation to cartoon. Worse, he is so unbound by strict rules of evidence, so willing to let fly with extreme allegations, that his credibility suffers.

These flaws are unfortunate, because Mr. Stein advances a provocative case. "A License to Steal" does not dwell on insider trading and the other well-documented sideshows of the 1980's. It targets the main event: the junk bonds themselves. Were they a good idea at all? Did Mr. Milken's $200 billion junk bond market serve any purpose beyond enriching its creator?

Mr. Stein's verdict is emphatic. Junk bonds, in his view, were a classic Ponzi scheme built on treachery, lies and strong-arm tactics that owed more to Murder Inc. than to sound economics. "Milken was no capo," Mr. Stein says, "but he certainly applied the general mind-set of the gangster to finance."

Mr. Stein dutifully begins with the World According to Milken. Investors bought junk bonds because they offered higher interest rates than government securities or blue-chip corporate bonds. These investors understood that some of their bonds would default and become worthless. But so long as relatively few bonds went bad -- Mr. Milken estimated the default rate at about 1 percent per year -- the higher payments, in the aggregate, outweighed the risks.

This is countered with the World According to Stein. The junk bond market was not a market at all. From Day One, it operated under Mr. Milken's tight personal control. There were few arm's-length negotiations over price, little reliable information on the quality of various bonds. In essence, Mr. Milken's bonds were worth whatever Mr. Milken said they were worth. His "ability to fix junk bond prices at above their true value" kept the market healthy and growing -- at least on the surface.

Mr. Milken also papered over his many bad deals, Mr. Stein writes. He frequently pressured buyers to accept new securities to replace outstanding bonds that were about to fail. These so-called exchange offers were crucial: they kept apparent default rates low and the market's faith in junk bonds high.

Finally, Mr. Stein tells us, as the 1980's wore on, Mr. Milken methodically assembled a stable of savings and loans and insurance companies that bought his bonds by the billions. These buyers (most of them now in ruins) pushed the market to dizzying new heights. In other words, the Milken empire was always less solid than it appeared. In fact, it was a house of cards destined for collapse.

An array of economic and political pressures triggered the collapse, including, of course, the agreement by Mr. Milken's firm, Drexel Burnham Lambert, to plead guilty to Government charges of securities fraud and cast its star deal maker overboard. (Mr. Milken, who was sentenced to 10 years, entered prison in March 1991.) But the mortal blow, Mr. Stein argues, came from a more unlikely source: an academic study.

The study's principal author was Paul Asquith, then of Harvard University's Graduate School of Business Administration. Mr. Asquith's careful analysis showed that the actual default rate on junk bonds was more than three times as high as what Mr. Milken maintained. His findings, published in The Journal of Finance in 1989, shocked the entire financial world.

The Asquith study "was not just a small tear, but the unraveling of the entire fabric of Milkenism," Mr. Stein writes. "When Asquith showed that junk was simply not a good investment at the prices Milken was charging, the bottom fell out."

The rest, says Mr. Stein, is history. A full-blown collapse was under way.

A NEAT theory -- but one that leaves some messy doubts. An indictment this sweeping, no matter how explicitly polemical, demands careful use of facts. But all too often Mr. Stein relies on hit-and-run documentation and unconvincing innuendo.

He asserts, for example, that Mr. Milken "personally may well still have a fortune of about $6 billion." His only source for this remarkable (albeit hedged) estimate, much higher than any reported elsewhere, is an unnamed "lawyer familiar with Drexel."

Mr. Stein also chooses to personalize his brief -- as if the real story of the 1980's were a grudge match between the junk bond king and his journalistic nemesis. This may enhance the drama, but it also gets, well, weird.

Mr. Stein says he became keenly interested in junk bonds after having lunch with a friend of his personal assistant. This friend, a young Drexel banker, did not realize that Mr. Stein was a financial writer for Barron's. ("He apparently thought I was a doctor of medicine, a mistake people often make.") The young man regaled Mr. Stein with sordid deal-making tales. The next day, however, after the Drexel banker learned of his mistake, he threatened to kill Mr. Stein "with his raw hands" if he ever wrote about their encounter.

Mr. Stein survived. And, in his search for the truth, he says he overcame a host of subsequent Drexel-inspired smears, apparent bribe offers and scurrilous attacks from pro-Milken writers. I suppose he recounts all this to enhance his credibility. Somehow it has the opposite effect.

Finally, and most important, one wonders how current market realities square with Mr. Stein's near-total dismissal of junk bonds. This year Wall Street will issue more new junk bonds than it did in any previous year. Junk bond investors are also making out fine. In 1991, they earned total returns of 41 percent. Pretty good for a discredited Ponzi scheme.

That is no reason to embrace the religion of junk bonds. They were never the unabashed miracle that Drexel claimed, and the firm's flagrant excesses left plenty of misery in their wake. But junk bonds remain an important source of credit for thousands of growing companies. And the market is stronger with its creator gone: prices are fairer, fees are lower, traders are more honest.

Michael Milken is in jail because he deserves to be; Benjamin J. Stein leaves no doubt of that. Still, his legacy deserves a more sober reckoning than it receives here.

A version of this article appears in print on Nov. 15, 1992, Section 7, Page 14 of the National edition with the headline: Adventures in the Junk Trade

https://www.nytimes.com/1992/11/15/books/adventures-in-the-junk-trade.html

From Junk Bond King To SPAC Whale: How Michael Milken Became A Big Investor In The SPAC Boom

by Antoine Gara, Former Staff

Hedge Funds & Private Equity

May 26, 2021

From <https://www.forbes.com/sites/antoinegara/2021/05/26/from-junk-bond-king-to-spac-whale-how-michael-milken-became-a-big-investor-in-the-spac-boom/?sh=2fc6a3bf1428>

MICHAEL PRINCE FOR FORBES

The big money fueling SPAC mania comes from smart hedge funds—dubbed the SPAC mafia— capitalizing on a “no lose” trade. No surprise that a fund backed by brilliant billionaire financier Michael Milken owns nearly 125 SPACs.

 https://www.forbes.com/sites/antoinegara/2021/05/26/from-junk-bond-king-to-spac-whale-how-michael-milken-became-a-big-investor-in-the-spac-boom/?sh=2fc6a3bf1428

If one were to do a case study of the SPAC bubble that overwhelmed U.S. financial markets in 2020 and early 2021, few investments would illustrate the mania better than a vehicle known as Churchill Capital IV.

Listed on the New York Stock Exchange in September 2020 after a $2.1 billion initial public offering, Churchill quickly became one of the hottest SPACs on the market. From January to mid-February 2021, Churchill rose 550% to a $15 billion market capitalization as novice traders on trading apps like Robinhood fervently bid the shell company to the moon in anticipation of its merger with an electric vehicle startup called Lucid Motors. Then, like so many SPACs, after the bubble was pricked by the Securities and Exchange Commission’s scrutiny and a retreat of speculators, Churchill came crashing down to earth, falling by two-thirds in value over the past three months.

While many investors were likely burned by Churchill’s roller-coaster ride, one Wall Street legend appears to have made a haul. Billionaire philanthropist and financier Michael Milken, once known as the Street’s junk bond king for pioneering the issuance of high yield bonds to finance leveraged takeovers in the 1980s at Drexel Burnham Lambert, profited from Churchill’s ascent. In addition, Forbes has discovered that Milken is a whale among SPAC investors, with exposure to a portfolio of 125 separate SPACs worth no less than $500 million as of March 30, according to our research.

Milken’s SPAC holdings come via a Brentwood, California-based investment firm called Silver Rock Financial, which once was his family office. In 2016, Milken seeded Silver Rock’s spinout as a private investment firm with “several hundred million dollars of his money” to get the firm off the ground, the Wall Street Journal reported at the time. Silver Rock has since grown to manage $3.7 billion in assets, assembling a massive SPAC portfolio, to the delight of its original architect.

In many respects, SPACS are the perfect financial product for Milken. 

Beginning in the late 1970s, Milken lorded over Wall Street after he discovered that fallen angel and lower grade bonds provided enough extra yield to more than compensate for their higher default rates, creating enormous investing opportunities. With that epiphany, Milken turned Drexel Burnham into a low grade bond factory, issuing debt that supported a generation of financiers from T. Boone Pickens and Henry Kravis to Carl Icahn, eager to takeover stodgy blue chip companies from RJR Nabisco to Gulf Oil and TWA. In the 1980s, it transformed Drexel from an afterthought investment bank into the epicenter of the financial universe, with Milken’s Beverly Hills based branch providing him income of more than $500 million a year. 

(In 1990, Drexel went belly up as Milken was prosecuted for securities violations by New York Attorney General Rudy Giuliani and pled guilty. He served time in jail and agreed to a lifetime ban from the investment industry. President Trump pardoned Milken in 2020, but the securities ban remains.)

SPACs, if played correctly, offer a potentially better deal than the junk bonds of Drexel’s heyday. They come with “no risk returns'' of between 10% and 20%, according to sources. This financial arbitrage, as Forbes has documented, is the lifeblood of the SPAC market, not the hopeful gambler trading on Robinhood. A few dozen sharp hedge fund investors—known as “the SPAC Mafia”—have perfected the trade. 

These hedge funds pile into SPAC IPOs, which come with financial goodie bags in the form of low-cost stock warrants, then wait for the SPAC sponsor to find their merger target. (SPACs raise money in IPOs, then are compelled to use the cash within 24 months to buy a stake in a private company, effectively creating a back-door public offering for the entity.) When a SPAC finds its deal, the SPAC Mafia has the option to either hold their shares in the merged company, sell their stock if it trades at a premium, or redeem their shares at cost and keep the stock warrants as a ‘thank you’ gift. It means that financiers participating in SPAC IPOs are guaranteed to get their money back, and then some. 

The case of Churchill is a classic example of the rewards available to SPAC Mafia investors. 

It began trading at a price of $10 in mid-September and Silver Rock disclosed it built a small position that month. By the end of 2020, Silver Rock owned a combined $6.3 million in stock and units, which still traded at about $10. Then, in 2021, Churchill skyrocketed, rising as high as $64 by mid-February as retail investors anointed Lucid Motors as the next Tesla. By the end of the first quarter, Churchill traded at $23 and Silver Rock was out of the SPAC entirely, meaning that it made millions, or possibly tens of millions on the deal in a matter of months. Had Churchill slumped below $10, Silver Rock could have redeemed its shares at cost, keeping valuable warrants. In addition to Silver Rock, SPAC Mafia funds like Magnetar Financial, Polar Asset Management and billionaire backed firms Millennium Management and Moore Capital Management also appear to have done well. 

“The SPAC Mafia trade involves accepting essentially free money,” Says Michael Ohlrogge, a professor at New York University and an expert on the SPACs. “We know that free money ultimately comes at someone's expense, usually from the post-merger SPAC investors. If there's anyone out there who's going to be able to take advantage of free money that's being handed out, Milken is one.”

The “sure thing” arbitrage has turned SPACs into the hottest financial product on Wall Street for hedge fund investors who feverishly buy their IPOs. It’s no surprise that the former junk bond king would opt for lower double digit returns from dozens of investments, which are guaranteed, over the riskier swing-for-the-fences approach being taken by some SPAC sponsors and retail investors in the aftermarket.

Since the beginning of 2020, nearly $200 billion has been raised by 575 SPACs in public stock offerings. With a total of 124 separate SPACs in its portfolio and a total of 148 SPAC-related securities, Silver Rock is easily among the biggest SPAC investors in the world with a half-billion dollar portfolio. (Forbes couldn’t ascertain if leverage was used.) 

Silver Rock is no neophyte to the SPAC market, which was mostly a backwater until early 2020. 

Filings Forbes examined show that the firm was a SPAC investor as early as at least June 2016, shortly after its spinout from Milken’s family office. SPAC industry insiders say that Silver Rock is a large, discerning, and highly active investor in the market. It is a major participant in the PIPE offerings that backstop SPAC merger deals, effectively getting a free look at the business combination. When the market was red hot, Silver Rock also was placing huge orders in SPAC initial public offerings, though demand was so high at the apex of the frenzy, many investors didn’t get their orders filled in full.  

Silver Rock’s SPAC portfolio also reveals an interesting reunion for Mike Milken with peers from his glory days at Drexel. Through Silver Rock, Milken is backing SPACs launched by Apollo Global, Ares Management and KKR, run by dealmakers Milken either worked with in the 1980s, or financed. Overall, the portfolio is among the broadest and most eclectic on Wall Street. Top holdings include SPACs focused on everything from decarbonization, to healthcare, rare earths mining and sports analytics. It’s also a backer of SPACs managed by business A-listers like billionaire Reid Hoffman, former director of the National Economic Council Gary Cohn, and two SPACs issued by Masa Son’s Softbank Group. 

Silver Rock doesn’t just invest in SPACs. It also has built a large credit investing platform. In 2020, it raised a $348 million collateralized loan obligation and runs strategies ranging from opportunistic credit investing, hybrids, plan assets, and special situation. Overall, the firm has a relatively small group of limited partners, reporting just 23 total accounts.

“[D]ozens of independent firms manage parts of Mike’s assets. His primary focus is on his philanthropies,” said Geoffrey Moore, a senior adviser to Milken, who acts as a spokesperson, in an email. “Silver Rock is an independent organization and Mike has nothing to do with its investment decisions, portfolio construction or asset allocations... No matter what the level of his exposure to various asset classes, Mike has no greater insight on the market for these investments than anyone receiving reports to investors.”

Milken declined to comment through Moore, citing a practice to not discuss private investments. Carl Meyer, the chief investment officer and head of Silver Rock didn’t respond to multiple emails seeking comment, or a voicemail.

 https://www.forbes.com/sites/antoinegara/2021/05/26/from-junk-bond-king-to-spac-whale-how-michael-milken-became-a-big-investor-in-the-spac-boom/?sh=2fc6a3bf1428

The Secret World of Mike Milken

MANHATTAN, INC.

September 1987 | LINK

by Edward Jay Epstein

....Some Background on Edward Jay Epstein

Edward Jay Epstein, Author and Stubborn Skeptic, Dies at 88

He questioned the findings of the Warren Commission, called Edward Snowden a prized Russian asset and exposed the diamond industry’s economic impact.

By Sam Roberts | Jan. 11, 2024 | New York Times

Is Edward Snowden a Spy? A New Book Calls Him One. By Nicholas Lemann | Jan. 9, 2017 | New York Times

Book Review |  HOW AMERICA LOST ITS SECRETS

Edward Snowden, the Man and the Theft

By Edward Jay Epstein

Illustrated. 350 pp. Alfred A. Knopf. $27.95.

[EXCERPT - ] Epstein proves none of this. “How America Lost Its Secrets” is an impressively fluffy and golden-brown wobbly soufflé of speculation, full of anonymous sourcing and suppositional language like “it seems plausible to believe” or “it doesn’t take a great stretch of the imagination to conclude.” Epstein’s first book, “Inquest,” published more than 50 years ago, featured another mysterious young man who spent time in Moscow, Lee Harvey Oswald. This book has a greatest-hits feeling, because it touches on several of Epstein’s long-running preoccupations: Russia; the movie and media businesses; the gullibility of liberals; and, especially, the world of penetration, exfiltration, false flags and other aspects of counterintelligence. The spirit of James Jesus Angleton, the C.I.A.’s mole-obsessed counterintelligence chief during the peak years of the Cold War and evidently a mentor to Epstein (he’s mentioned several times), hovers over these pages.

From <https://www.nytimes.com/2017/01/09/books/review/is-edward-snowden-a-spy-a-new-book-calls-him-one.html>

 The Secret World of Mike Milken

MANHATTAN, INC.

September 1987 | LINK

by Edward Jay Epstein

In December 1986, U.S. Attorney Rudolph Giuliani made one of the most extraordinary deals in the annals of American justice. It was with Ivan Boesky, the Wall Street arbitrageur, who had admitted using stolen information to make over a $100 million. Not only was he was allowed to plead guilty to a only a single count of securities violations, but he was permitted to keep secret his foreign bank and brokerage accounts, even if they had been enriched by his criminal activity. Similarly, the accounts in his wife and children's name were protected. This accord was not Giuliani's work alone: it was initialed by the U.S. Attorneys in both Washington D.C. and Los Angeles. What Boesky offered to give in return for this leniency was, among other things, information about the secret dealings of a reclusive financier in Los Angeles-- Michael Robert Milken.

Even as Giuliani hammered out the final terms of this bargain with Boesky, Milken, on the telephone in his trading room in Beverly Hills, was lining up some $20 billion in financing for raids on such corporate behemoths as US Steel, Gillette, and Trans World Corporation. Despite the scope of his operations, he had tried to remain invisible to the world at large by denying all press interviews, avoiding social functions and buying up photographs of himself.

Now, with a stroke of the pen by Boesky and three U.S. Attorneys, Milken was suddenly in the cross-hairs of a highly-visible federal investigation.

Despite this new focus on his activities, and rumors that his indictment was imminent, Milken bravely appeared in Beverly Hills Hilton Ballroom, for his ninth-- and last junk bond convention in April. He walked amid four bodyguards, wearing a beige sports suit and defiant red tie. His Californian sun tan and toothy grin made him look much more boyish than his forty-one years. So did the well-fitting hair piece he wore. The hereditary loss of hair he suffered as a teen-ager added to his painful shyness-- and reclusiveness from the press.

More than 2000 clients of had shown up-- many, if for no other reason, then to show their support for him. They were mainly middle-level money managers from Life insurers, Savings and Loans Associations, Pension funds, College Endowments, off-shore banks, mutual funds, financial syndicates and other institution investors. Over the past decade, they had invested scores of billions of dollars in his junk bonds. Many owed their performance record, if not their careers to him. Even if they had heard his mesmerizing message before--and pointed jokes-- they watched him intently.

Milken flashed a quick smile the audience-- as if to say the world was still under control. But there was also a jarring twist in his face-- suggesting the enormous strain he was under. As he began his lilting, almost preachy cadence, his deep set eyes grew more intense. Like some leader at a revival meeting, he looked dead ahead, making sure he was in total control of his audience.

"We should all recognize from the moment we wake up in the morning, we don't like change. We don't like it when our children stop listening to Mary Poppins and all of a sudden have rock video blasting in the house...we don't like it when they change their hairdo or dress. People who run corporations don't like change either."

He hesitated a moment for effect; a grimace on his face-- as if he could personally feel the pain these "people" were in. As everyone in the room fully realized, the staggering change he was talking about was the one he himself had brought about-- the junk bond revolution.

"One way to insulate yourself is to deny change is occurring. You lash out at people, and whose easiest to lash out at...Wall Street."

He is thin body was suddenly taut with nervous energy. He looked at his supporters, who knew that he was explaining, in his own code, why the government was about to come crashing down on him.

"Much of American business has run to the [government] and said, 'Let's change the rules, we don't want competition, we don't want pressure....Where the corporate officer has denied the market place its right of judgment, and put up barriers to change... and become an ostrich, eventually change becomes violent.

Milken left the conference mobbed by supporters. Just as they had put their faith in his new bonds-- and profited by doing so-- they accepted his message: the establishment was after him because they feared change. As one supporter stated, "Corporate America is hoping to indict Mike Milken...so it can go back to sleep for another 30 years." It was, to them part of "the war" on Wall Street.

Whatever the reason for the powerful reaction against Milken, one thing was certain: he was no ordinary financier. In a few short years, he had reshaped the financial world in a way that no one else had done since J.P. Morgan in the nineteenth century. What he did almost single-handily was destroy the dam of traditional restraints that had effectively penned in a half-trillion dollar reservoir of capital. When this pool of funds, known as the bond market, which had been retained for more than a century as the private fishing pond for Fortune 500 and utility companies, suddenly was channeled by Milken into new hands-- including non-traditional entrepreneurs and corporate raiders-- it changed not only existing relations on Wall Street but the hold of management over publically-held corporations. For better or worse, it threatened to irreversibly alter the balance of power in corporate America. How one man, an outsider without any connections, could bring about changes of this magnitude, and make perhaps a billion dollars for himself in the process, is a story of American capitalism.

Only a decade earlier, Milken was getting his business degree from the Wharton School. Now, he was the central figure in a struggle for control of a vast part of the corporate wealth of America. "I never saw myself as a revolutionary...all the revolutionaries I know are dead," he told me.

What Milken had sought throughout his remarkable rise to power, he explained, was not chaos-- but control over the things around him. "I don't like it when they change my seat at work, it probably disorients me for a week," he explained. When he moved his 20 man bond trading department from New York to Los Angeles in 1978, he found, when he sat at the center of the new X-shaped trading desk he found it difficult to see the two employees on the corners of the desk. He stormed out of the office, ordering the entire office to be redesigned so that he could see everyone from his seating, at all times. Subsequently, he moved his trading room to the building that houses Gump's on Wilshire Boulevard-- a building that he, and his partners, own. "I have no private office," he said to me, "I never had one in my life."

Ever since he had been a teenager in the San Fernando Valley Milken found one means of getting control was simply working longer hours than anyone else. At high school he was both head cheer leader and Prom Chairman, and earned money for himself working nights at a diner, at Berkeley, he made Phi Beta Kappa while moonlighting at the accounting firm of Touche Ross. He then enrolled at Wharton, where he commuting on a greyhound bus from Philadelphia to New York to trade bonds at Drexel. He told Frederick Joseph, who is now CEO of Drexel, "I don't know if I am smarter than anyone else but I can work 25 per cent harder."

He undertook, as a matter of routine, to work a fifteen hour day. He usually arrives at the trading room at 4:30 a.m.-- toting two dog-eared canvas bags full of reports and memos that he had taken home to read-- and remains there until at least 7:30 at night. "Lunch," usually a sandwich and soda, is brought in on a tray for him, and everyone else, at 10 a.m. He neither smokes or drinks-- not even coffee, explaining, "I don't need stimulants." Three assistants, who work in relays, starting at 4 a.m., try to keep up with him.

He uses the telephone as another means of extending his control. As young women in jeans move around the trading room passing scribbled notes to him, he relentlessly phones clients to tell them the "story" on companies whose bonds he is "placing." His pitch is often in the form of long monologues.

Keeping visitors waiting for audiences is another means of maintaining control. Not uncommonly, corporate executives begin cuing up in the conference rooms outside from early in the morning to late at night. They come typically to discuss borrowing money for their company in the junk bond market. Often, they then wait for over an hour. When Milken finally strides into the room, he is accompanied by a host of his aides, relevant financial experts and executives from Drexel's corporate finance department. There is, not uncommonly, more than twenty people sitting around the oval-shaped table.

According to executives who have gone through such "audiences," Milken usually listens patiently and courteously to their case for getting access to junk bond financing. He then, in another act of control, dismisses from the room all but four or five participants. In this smaller group, he then presents his own analysis of, and strategy for, the company seeking money in the bond market. One industrialist who sat through such an audience was "stunned" as he described it afterwards, by Milken's intimate knowledge of his company's financial situation. Then, suddenly, the audiences would be over and Milken would disappear back into the trading room.

Nominally, Milken is merely a minor executive at Drexel--the vice president in charge of its Beverly Hills branch office. In fact, in an extraordinary arrangement, he operates what is tantamount a company within a company. By moving his staff to LA, he was able to operate outside of the sought of direct supervision that he might have to contend with in N.Y. His inner circle includes Lowell Milken, his younger brother and a lawyer by training, Peter Ackerman, his right-hand man and a Fletcher School Ph.D. and Richard Sandler-- his personal lawyer. He also has his own accountants and consultants. He also takes a large part of Drexel's profit: In 1986 alone, he, and his staff, reportedly got over a quarter billion dollars in bonuses-- much of which was invested in Milken's extramural ventures-- and highly-aggressive tax-shelters. In these investments, he has made many of these top aides multi-millionaires in their own rights and partners of his.

From <https://www.edwardjayepstein.com/archived/milken.htm>

PART 2

The Secret World of Mike Milken (page 2)

MANHATTAN, INC.

September 1987

by Edward Jay Epstein

Milken's position proceeded directly from his domination over junk bonds. Once considered something of a joke on Wall Street, they become by the mid-1980s, under Milken's direction, the main means of financing through debt the expansion of medium sized corporations-- which meant 95% of the corporations in America. Although he had no exclusive monopoly on junk bonds, his ability to sell them to financial institutions, through his personal network of money managers, made him one of the most powerful financier in the world.

How Milken created this new universe of money in a few short years, with himself at the center as the "grand sorcerer" of finance, as the Institutional Investor called him, is remarkable testimony to the power of a single idea. The insight came to him gradually in the mid seventies, he explained. He then was working at Drexel in New York as a specialist in so-called "fallen angels"-- which were the bonds of once great corporations that, because they had fallen from grace, had been downgraded by the rating services from investment quality (BB or better) to "junk." His job, figuring out whether the actual risks were of them defaulting was outweighed by the premium interest they paid, led him to question the structure of the entire market for capital in the United States.

When he recounted his thinking on how the corporate economy gets its money, "The World According to Milken," as he put it-- he reminded me of the chess prodigy Bobby Fisher. Just as Fisher could see combinations in a chess board no one else could, Milken seemed to see moves not obvious to others in finance. With a series of assertions, often in incomplete verbal shorthand, he would move from level to level.

Level One. "What is a bank?" he asked rhetorically. "It is nothing more than a bunch of loans."

Level two. " How safe are these loans?" "They are made mainly to three groups that may never repay them in a real economic crisis-- home owners, farmers and consumers of big ticket items."

Level Three. "What guarantees these loans?" "These banks usually have $100 in loans for every dollar of equity-- which means there is very little backing them up."

Level Four. "They are hardly a risk-free investment yet their bonds get triple-A ratings" " What does this tell us about bond ratings?"

This brought him to his main target: the bond rating system. As it had existed for a hundred years, two companies-- Standard & Poor's and Moody's-- assigned corporate bonds a letter grade rating descending from AAA to C. Anything above BB was considered investment-grade, which meant there was virtually no risk of default, and the bond-buyer could count on a fixed rate of interest. Since the rating was awarded on the basis of how large the company was, as well as its historical stability, only "the 600 to 700 largest companies qualified," Milken found. These were companies with assets over $200 million, and which had been in business for decades. Because of the rating system, they were the only companies in which many insurance companies, pension plans, college endowments, banks and other institutions permitted their money-managers to buy bonds. This "half-trillion dollar capital market", as Milken calculated it, was closed to the other "24,000 American corporations." These excluded companies could only borrow from commercial banks, at unpredictable short-term interest rates from banks, or from insurance companies, which attached restrictive covenants to the money.

This "black and white" distinctions made no sense to Milken. As he saw it from his analysis of "fallen angels," the underlying "risk free" premise was wrong: "There is no such thing as a risk free investment." Top rated bonds could fall precipitously in value, not only if the company went bankrupt, but if its credit-rating was lowered because their industry declined-- like steel and ship-building did in the seventies. Ratings measured "the past not the future" risk. "This was crazy," Milken said. "rating services had the wrong computer program."

To correctly weigh the risks, it was necessary to appraise the future. He reasoned: "The value of a company is the sum of two components: its past, as represented by its historic balance sheet, and its future, represented by its prospects." By concentrating on the first component in his equation--the historical balance sheet-- the rating services had seriously neglected the other component--future cash flow.

"And that what bonds are all about-- getting paid off in the future," he added. He cited the case of Metromedia-- which then owned four television stations. "You didn't have to know much about its past record, or the number of years it paid a dividend, or what letter the rating services gave it. All one had to do was be able to add together four numbers-- the value of its stations in New York, L.A., Chicago and Boston-- to find the total value greatly exceeded what it owed." So long as one believed these stations would not decrease in value in the foreseeable future, its bonds would be a safe investment "whatever their ratings."

This brought Milken to the next level of his insight. If bonds were pegged to their future cash flow, rather than past track record, then the old rules would no longer hold. Nor would the investment-grade labels matter. Bonds would then become, like common stock and real estate, just another form of risk management, which is what Milken saw them to be in reality. If the bonds of medium-sized companies were more risky, they could compensate the buyer for the extra gamble by paying extra interest. He assumed that many growth companies could afford to pay this premium interest out of their future earnings (especially since interest, unlike dividends on stocks, is tax deductible).

What he eventually came up with was a cross between a bond and a common stock. It was called a bond, and therefore institutions, restricted to bonds, could buy it for their portfolios, but, in paying out a large slice of its future cash flow to the holder, it acted like stock. Unlike existing junk bonds, which were the debris of fallen companies, Milken custom designed his issues to be unrated bonds. He realized they were "subversive" since they undercut the established rating system, but, as an outsider, this did not disturb him. He had always been, as he described himself, "something of an iconoclast." He, moreover, saw that if he could open up the huge capital market to growth corporations, they would beat a path to his door. Milken conceived of his role as a marriage-broker, "bringing about kind of a marriage between institutions" and aggressive-new corporations.

At Drexel, Milken had already proven himself a money-making phenomena. By 1976, he was earning over 100 per cent on the capital he was given to trade his exotic Fallen Angels -- and got a $5 million bonus (which he immediately re-invested). When Fred Joseph listened to his analyses, he realized that Milken, "understood credit better than anyone else in the country." Joseph then headed Drexel's corporate finance department, which would have to work in close collaboration with Milken in selecting and advising corporations that issued these new bonds. But the profits would be enormous-- if Milken could persuade money-managers of the validity of his concept, and thereby break the strangle-hold the rating services had on the bond market.

The idea required changing the mind set of institutions. Even if it meant earning higher returns, money managers had, as Milken shrewdly recognized, "career reasons" for sticking to buying bonds that carried an investment-grade rating. As long as they bought bonds with this "seal of approval," there careers would not be in jeopardy-- even if the bonds went bankrupt (as, for example, the Washington State Bonds did). On the other hand, if they invested their funds' money in anything else, they would be held personally accountable.

Milken therefore embarked on a determined campaign to bring the more aggressive money managers into an alliance with him. Like any political campaign aimed at changing perceptions, Milken's crusade operated at different levels; public, and hidden.

As if to symbolize his break with the establishment, he moved his headquarters from Wall Street to Los Angeles on July 4th 1978. It was his 32nd birthday-- and his declaration of personal independence from New York. His first order of business was, he recalled teaching his top aides "how to communicate ideas."

His immediate target were the money-managers who invested the portfolio of the highly-competitive thrift banks, pension funds and life insurers. Since the very survival of these institutions, unlike older and more established ones in the East, depended on their being able to attract new clients by paying the highest possible rates of return. They desperately needed some edge over rivals that put their funds only in investment-grade bonds; and Milken offered them the means to save themselves: junk bonds. They still had to be convinced these new instruments were safe.

Milken worked tirelessly to tell them the message what they wanted to hear: ratings were irrational. In his pitch, he compared rating services to movie reviewers that gave theater owners "incorrect reviews" of risks-- with the result that the theaters missed booking the right films. He argued that they ignored the growth potential in their equation. After he laid down the logic of junk bonds, he ran through numbers intended to demonstrate how the higher interest would more than compensate for any losses through defaults in a portfolio of junk bonds. The "bottom line" was that they could earn more money than their competitors in the world of institutional finance. It was a message his audiences evidently wanted to hear.

In a remarkably short period of time, Milken won over a host of money managers with "billion dollar checks in their pocket." As these money managers found junk bonds gave them an edge of over five percent over investment grade bonds-- or $50 million a year for every billion they had in their institution's portfolio-- they were able to attract more institution's to their funds. Other money managers, seeing the results, joined the ranks of the converted.

Many of these fund managers whom I saw, not only accepted his philosophy-- but preached it themselves. Howard Marks, the managing director of Trustco, a Beverly Hills based manager of pension funds, for example, had been convinced by Milken about the bias in the rating system when he was at Citibank in 1977. He recalled Milken talked then not only about making money but, on a more altruistic level, about how the nation would benefit by making capital available to growth companies. He then moved to Trust Company of the West, which invests pension funds; and by investing 1.5 billion in junk bonds, he became one of the top fund managers in America. (He also has been recruited by Milken to help him coach children's basketball team.)

From <https://www.edwardjayepstein.com/archived/milken2.htm>

PART 3

The Secret World of Mike Milken (page 3)

MANHATTAN, INC.

September 1987

by Edward Jay Epstein

The story was the same with Thomas Spiegel. When Milken met him, his family owned a small thrift, Columbia Savings and Loan, which invested its funds mainly in government-backed 30 year mortgages. As short-term interest rate steadily rose in the 1970s, S&Ls had to pay progressively higher rates to get the public to buy their Certificates of Deposits, which drove many to the brink of bankruptcy. Milken showed Spiegel that the answer lay in substituting higher-yielding junk bonds for mortgages in its portfolio. By doing this, Spiegel had increased his bank's assets from 400 million to 4 billion dollars-- much of it invested in Milken's bonds.

As the number of converts grew, Milken created an annual jamboree for them in Beverly Hills. As part of the logistics, he hired fleets of stretch limos to shuttle the money managers around; plush restaurants, such as Chasen's, to wine and dine them, and entertainers, such as Frank Sinatra, Diana Ross and Kenny Rogers to amuse them. For his more exclusive clients, there was also stag parties in bungalow Eight of the Beverly Hills Hotel. As one participant, who attended in 1985, recalls, about 20 "starlets" were ushered into the room, like " pigeons brought in a net to a skeet shoot-- and then let loose for the guests to shoot at." The "starlets" were arranged through a model agency partly owned by one of his business associates. There was even a plan to charter the Concorde for a supersonic outing to Wimbledon, where Milken's top clients would have their own tennis clinic with Virginia Wade.

But despite such excursions, the purpose of these multi-million dollar conferences was, as Milken explained it, to give junk bond buyers "a sense of purpose." Beginning at 6 a.m, there were presentations by corporations that were issuing these bonds, followed by "news breaks" by Milken, where he acted as both a MC and cheerleader.

Among these carefully orchestrated events were sessions in which speakers stressed the good junk bonds were doing for the economy. For example, in 1985, first, Senator Chick Hecht told how the country needed growth companies, then a series of economists explained how junk bonds were crucial to growth companies, followed by Ralph M. Ingersoll, the CEO of Ingersoll Newspapers, who told how they had made his company more productive. Finally, to unrestrained cheers, Milken summed up the message.

The change he had brought about through his crusade was that the 2000 or so money managers in the audience were no longer limited in the bonds they bought to a few hundred investment-grade companies; they could bonds in thousands of unrated companies. He had opened up a new universe of speculation to them.

Milken accomplished this feat not through his skill as a bond trader but through his skills as a salesman. He was Wall Street's version of the Pied Piper-- leading wayward fund managers from their traditional village. The main occupation of his "traders" was selling bonds to his long list of institutional customers, which they "distributed" according to his instructions-- though they also bought and sold bonds to support the market (and made the spread). The bulk of the profit he generated for Drexel came not from any sort of arbitrage between junk bonds and investment grade bonds-- which, as he explained it to me, he never really did-- but from the fees he got from selling previously unsalable corporate debt.

These money-managers were willing to go along with Milken not solely because of his mesmerizing presentations-- though they provided the "doing good" rationale their superiors might like to hear-- but because of the track record of his junk bonds. The companies he financed boomed, rather than defaulted (In 1986, for example, not a single one of his companies missed an interest payment). He also provided them with a liquid market in which they could quickly sell any junk bonds that made them nervous. Moreover, the prices for these bonds were, despite fluctuations in other markets, moved very little. This established what appeared to be a very stable, as well as profitable, medium for the institutional funds that they had been entrusted with investing.

The means by which Milken maintained the appearance of a stable junk bond market was a far less visible part of his strategy. From the moment he moved to California, aside from giving his pitch to money managers, he sought out alliances with larger financiers who personally controlled other financial companies-- especially insurers with large portfolios of bonds. Among the allies he made were Saul Steinberg (Reliance Group Insurers); Fred Carr (First Executive Life Insurance), Carl Lindner (American Financial Corporation), Victor Posner (..) and the Belzberg Brothers ( First National Corporation). Milken's relation with these financiers went beyond merely selling them bonds. In the case of some, such as Carr and Steinberg, he became their partner in other joint ventures. He also acted as their financier when they need to raise their own money to acquire other companies. What he created was a common set of interests between himself and others controlling financial companies. Fred Carr's First Executive alone invested most of its 1.4 billion dollar portfolio in junk bonds (as well as setting up an offshore re-insurance company, First Stratford, in partnership with Milken. The extent to which he depended on a handful of financiers was revealed by Milken in a deposition he gave in a law suit involving the Green Tree Acceptance Corporation. He acknowledged that "I would not consider it unusual to find six or seven institutions buying anywhere from 50 to 70 per cent" of his junk bonds.

Moreover, Milken, together with present and former Drexel employees, became a heavy investor in his own junk bonds. The resources at his disposal included, among other entities, his personal trading account, estimated to be over 150 million dollars, the Milken family foundation ( which in 1984 reported buying $104,621, 379 worth of securities) and a half-dozen partnerships, he had organized with his employees, some dating back to the mid-1970s, in which they re-invested much of the profits and bonuses they had receive at Drexel.

In addition, Milken, with a few top aides, had a controlling interest in First Stratford, the off-shore re-insurance company, which had 734 million dollars in assets .Milken was also a partner in two investment vehicles run by his former trading assistants-- Bass Limited Investment Partnerships, with two billion dollars in assets; and Pacific Asset Holding, run by his former chief aide, Gary Winnick ( who himself invested $30 million), which engages in everything from risk arbitrage of take over stocks to Leveraged Buy Outs. It reportedly has a billion dollars in capital with which to trade junk bonds.Then, Offshore in Bermuda, along with First Stratford, there is Garrison Investments, operated by still another of his former aides, Guy Dove III. It reportedly re-invests over three billion dollars in municipal holdings, pension plan and other institutional funds-- much of it in junk bonds.

Finally, Milken also has a powerful voice in Drexel's own $3 billion bond portfolio, if not total control. He is its third largest share holder-- after Bank Lambert in Brussels and its own pension plan. According to estimates of former associates of Milken, all these funds-- either controlled by Milken, his former aides or Drexel, may be as much as 10 billion dollars. If effectively traded back and forth between issues, this sum could do much to create the image of a stable market.

Milken thus became, aside from a bond salesman, a market maker for all junk bonds. His Beverly Hills office did, according to a deposition he gave, 250,000 transactions a month. Within this system, money was commonly moved from one coded account to another without the name of the buyer or seller being identified, even to his own employees. "He didn't respect any conventional boundaries," an arbitrageur, who knew Milken well, observed. "It all may have been out of control," a competitor at Morgan Stanley suggested. On the other hand, such formulations, based on orthodox precepts about bond trading, may have seriously underestimated the leverage over the market that wasn't visible to outsiders. With billions of dollars flowing through his various entities, and acting himself, under different hats, as buyer, seller, market-maker and investment banker, Milken had an extraordinary tight grip not only over the prices of bonds in his market-- but over the perception of the entire phenomena.

By 1986, the small stream of money he had diverted from the investment-grade market in the late 1970s quickly turned into a torrential river of funds. Entire industries, such as cable television, health care and regional airlines were developed through the proceeds. And it nurtured a whole new class of entrepreneurs-- men like Henry B. Kravis, who, through his firm, Kohlberg, Kravis Roberts, organized over $30 billion in leveraged buy outs; Rupert Murdoch, who through his "fourth network" and other innovations, forged a global media empire; William McGowan, who, through MCI, built a competing phone system to ATT, Ted Turner, who developed 24 hour cable news and Frank Lorenzo, who, through competition and mergers, created the largest airline in the United States.

If this new source of financing had only been used for helping medium size companies, the corporate establishment might have more easily accepted it. But as it poured in at an accelerated rate, Milken, and his associates at Drexel, began using it to finance corporate raiders, such as Carl Icahn, Ronald Perlman and T. Boone Pickens. Up until the junk bond market became available, few financiers could borrow sufficient capital to get control of multibillion dollar corporations. Now A single client of Milken's, Perlman, who had already taken over Revlon, was now bidding $9 billion for three different companies. Icahn, who had taken over TWA, and going after US Steel, compared management to "gardeners" who had come to think they had owned the estates were paid to take care of." Pickens, who had attacked some of the largest oil companies in the world--including Gulf, Phillips and Unical-- was now spearheading a political movement, the United Shareholders of America, to fight the "corpocracy." All three raiders were seen, for good reason, as "Milken's creations." These raids-- and the leveraged buy outs and restructuring they led to-- rapidly began to change the balance between owners and managers.

From <https://www.edwardjayepstein.com/archived/milken3.htm>

PART 4

The Secret World of Mike Milken (page 4)

MANHATTAN, INC.

September 1987

by Edward Jay Epstein

Milken pointed out that whereas the entrepreneurs using his junk-bonds owned 30% of their companies, the managers (and Directors) of "Corporate America" owned less than 1% of their company. This swing in the "delicate balance" between entrepreneurial and managerial companies was causing "some pain," as he put it. Although he conceded it "was unfair to blame the manager if the owner had not showed up for 30 years"; now, through his junk bonds, they were showing up. As leader of the junk bond movement, he had to rationalize what was happening in terms of "doing good."

He spoke of the conflict was between value and size. Owners sought the former. They wanted to see the value of their investment increase, even if it meant reducing the size of the overall company by selling divisions that they couldn't themselves manage efficiently to others. The example, he gave was the new owners of Beatrice, who sold its coca cola bottling plant back to Coke, and its Playtex division back to its original founder, increased the value of their investment by over a billion dollars but reduced the size of the conglomerate. Managers, on the other hand, tended to be concerned with the size of their domain, which, in many cases, defined their standing in the community. Milken argued this focus often led to inefficient, citing in the case of Beatrice, that the previous management had spent over 100 million dollars sponsoring auto races, which they evidently personally enjoyed, and for an advertising campaign to create a corporate image for Beatrice-- though none of its products were sold under the Beatrice brand.

The idea that values could be increased by reducing the size of corporations provided an appealing logic for financing takeovers. If the new owners could increase the cash flow by selling off parts of the company, this increment could be committed to repaying the bonds. Moreover, to make this takeover financing less risky, Milken arranged the transaction so that the bonds were only bought when, and if, the raider acquired control of the company. In addition, in case the deal failed to come to fruition-- as most did-- they buyers-in-waiting received a handsome "commitment fee" from the raider. Institutions, seeing a profit with a minimum apparent risk, rushed in to provide this take over financing. (The American Lutheran Church' pension, for example, received a $750,000 commitment fee for agreeing to be a buyer-in-waiting of 10 millions dollars of bonds, without putting up any money). These pledges which Milken lined up allowed Drexel to provide raiders with a letter stating it was "highly confident" the financing could be arranged. For its part, Drexel received a cut of the "commitment fees"-- which rarely involved anything more than a promise -- which amounted to hundreds of millions of dollars.

In terms of sheer power, Milken was reached his zenith in the fall of 1986. Over 900 companies had become issuers of junk bonds -- which was larger than the number of companies issuing investment-grade bonds, and the junk bond market was channeling up to four billion dollars a month to companies excluded from the traditional bond market. Because of Milken's money machine, corporations signed on with Drexel (whether they needed the money-- or out of feared, if they didn't, Drexel would supply the money to their competitor). Drexel, which had been a minor brokerage house 5 years earlier, now, in terms of profit, had become America's leading investment bank. Drexel's pre-tax profits were reportedly over $1.5 billion in 1986.

Suddenly, as Business Week warned on its cover, no one was safe anymore. Felix Rohatyn, a senior partner in Lazard Frere, warned "The takeover game as it is practiced today is a really a little like the arms race. You have to stop it before it gets out of control." Lane Kirkland, the President of the AFL-CIO, called it "an outrage and a bloody scandal." Senator William Proxmire, a Democrat from Wisconsin, stated "The rising tide of hostile takeovers threatens the foundation of the American business system."

Sir James Goldsmith, who has been both a client and an opponent of Milken's, saw the conflict proceeding from the threat to take power away from those who had held it. "I don't know whether or not Mike Milken realized at the time that he had found a way of financing an immense revolution in America, but now he has witnessed the full power of the establishment triangle: big business, big unions and big government." He then added, " As I European, I witnessed the same alliance trying to avoid change and neutralizing those responsible for it."

"It is nothing short of war," declared one of America's leading industrialists, who asked not to be identified out of fear of being caught in the cross-fire.

Wall Street was only one front in this war. It was fought also in court rooms, board rooms and back rooms of state legislatures, as well as on television and op pages, where accusations were made that corporate managers were "corpocrats," and raiders "assassins in three piece suits." It even was waged even on the streets of Akron, Ohio, were Goodyear organized workers, wearing rubber face masks, to march in protest against Sir James Goldsmith.

At the center of the conflict is an almost philosophic disputation about the purpose of the large corporation in the scheme of American capitalism. In one camp, the defenders of the present system of corporate stewardship, argue that the corporation must be regarded not just as a private profit-making but as a public institution. As such, they must serves not only their legal owners--the share-holders-- but broader interests, including their workers, suppliers, the local community and the nation. They hold that management, which represents these community interests as well as shareholders, is best suited to run these institutions.

In the other camp, the raiders and their allies, argue that corporation best serve others by serving their legal owners-- the shareholders. In this view, they benefit other constituencies--such as labor, suppliers and communities-- not by being charitable institutions but by making the most efficient use of their resources-- which may mean selling or closing down unproductive divisions. They hold that only managers who are accountable to owners have the incentive to make such hard choices. Such accountability comes down to owners having the ability to fire them-- which may may mean taking over the corporation.

Behind these different rationales (which belligerents may-- or may not-- sincerely believe), both sides are after the same prize: control of the corporate wealth of America. The means for waging this battle is money.

By opening up the capital market, like some Aladdin's cave, to outsiders, Milken has made himself central to this war. To end the threat to take away their stewardship, and power, corporate managers had to somehow close the cave. No unrated bonds, no take overs.

Under siege, corporate managements turned in increasing numbers to State and Federal government for help. By November 1986, some 30 bills had been proposed in Congress, while a dozen states passed or considered anti-take over laws. With the Business Round Table, which represents the Fortune 500, warning that junk bond take overs could bring on a 1929-type depression, the Federal Reserve Bank raised margin requirements on junk bond financing, State Insurance Commissions mandated reduced investment in junk bonds, and Congressmen called for new restrictions on their purchase.

Milken tried to explain these attacks on his junk bond empire to money-managers with a baseball metaphor. "Just imagine there was a baseball team, like the N.Y. Yankees, that won all the time. It even came to believe it had a divine right to win. Then a new team came along whose pitchers knew how to throw curve balls and sliders which its hitters couldn't hit. It began to lose. So its manager decided, rather than teaching them how to hit these pitches, to go to the Commission -- and have them banned."

Senators on the Banking Committee listened, the Chairman, William Proxmire, opened a special hearing on Wall Street by asking "How much do we really about the corporate takeover game and the complex network of information that circulates among investment bankers, takeover lawyers, corporate raiders, arbitrageurs, stock brokers, junk bond investors and public relations specialists?"

This question, which raised the specter of finding a vast criminal conspiracy behind the battle for corporate control, was directed to Rudolph Giuliani, a prosecutor who had made his reputation proving criminal conspiracies against the Mafia, and Gary Lynch, the Director of the SEC's enforcement division. Senator Proxmire explained that in 1933, the same Senate Banking Committee had "recruited" a young attorney named Ferdinand Pecora to go after "white collar criminals" on Wall Street. Pecora, as the Senate's chosen instrument, went after the villain of that era: The House of Morgan-- who had turned the nation's capital markets into a private preserve.

The Chairman then came to his point: "Mr. Giuliani and Mr. Lynch, you are the Ferdinand Pecoras of the 1980s; through your vigilance, Wall Street is being rid of some of its criminals whose greed has cut a sorry path through our American system." His message--and charge-- was clear. The new Pecoras' target would be Mike Milken, who ironically was responsible for breaching the walls around J.P. Morgan's preserve.

Giuliani had already cut his deal with Boesky. He also cut deals with the seven other participants in the Boesky ring (who worked for such firms as Lazard Frere, Shearson, Wachtell Lipton, Kidder Peabody and Drexel)-- thus ending the case with 8 guilty pleas. The New Pecora abruptly shifted his investigative focus from the inside-trading scam to possible irregularities in Mike Milken's operation.

Giuliani suggested the tough tactics he planned to employ when he was asked what he believed was the difference between culprits in organized crime and those on Wall Street. He answered the latter "roll easier"-- meaning that Wall Street financiers, when threatened with doing hard-time in prison, could be more easily induced to implicate others to save themselves. To this end, he arrested Timothy Tabor, who had worked in the Kidder Peabody Arbitrage Department, too late in the afternoon for him to arrange bail-- or even a lawyer. No indictment had been obtained, nor was he ever advised he was being investigated. He was then told he would have to spend the night in prison if he did not cooperate with Giuliani's investigation by making a taped phone call to his ex-boss. Giuliani candidly explained "This isn't an invitation to a tea party-- people are arrested in the hope they will tell you everything that happened." (In this case , Tabor proved an exception to Giuliani's prediction and, rather than "cooperating" spent the night in jail. (Giuliani subsequently dropped these charges when it came time for him to have a day in court).

Parking violations, as the name implies, involves a brokerage house or bank keeping a client's stock in its own name in disregard of its reporting requirements. Such "parking" may allow the client to temporarily bypass his margin requirements, keep secret his position in a company that otherwise he would have to disclose, or stay within limits imposed by other rules. It may also sometimes used by portfolio managers who "window dress" their fund's holdings for public reporting purposes. Such infractions of the myriad of reporting requirements was not a rare occurrence. As one Wall Street executive observed,"There is not a firm on Wall Street that can be sure it has not, at one time or another, committed some technical violation of these laws." Although clearly a breach of the securities law, up until now no one ever went to prison for such an infraction. The "new Pecoras" have,according to their testimony, a very different idea about "parking violations." They have over the past 7 months subpoenaed numerous Drexel employees and clients, attempting to unravel relations Milken may have had with clients that, in one way or another violated reporting requirement.

Whatever the final disposition of Mike Milken, the financial world will never be the same. With his multi-billion dollar resources and secret alliances, he has created the image of a viable and liquid market in junk bonds. By any standard, this is a truly extraordinary accomplishment which has changed the way that funds held in trust are invested.

From <https://www.edwardjayepstein.com/archived/milken4.htm>

UCLA Law launches the Lowell Milken Center for Philanthropy and Nonprofits - Daily Bruin

By Amy Wong

Feb. 15, 2024 dailybruin.com

From <https://dailybruin.com/2024/02/15/ucla-law-launches-the-lowell-milken-center-for-philanthropy-and-nonprofits>

UCLA community members said a new research center at the School of Law provides opportunities for leadership and scholarship related to nonprofit law and philanthropic efforts.

The law school established the Program on Philanthropy and Nonprofits in 2021, which has now transformed into the Lowell Milken Center for Philanthropy and Nonprofits after Milken, the founding donor of the center, gave an additional $8.05 million for its creation.

“What motivated me is the rather unique moment in history that’s taking place as my generation, the baby boomers, pass on the amount of wealth that they left to foundations,” Milken said. “(This) is something we’ve never seen in our nation before.”

Because of the recent donations Milken made, the law school can focus on serving the students in the nonprofit sector instead of spending time fundraising, said Jill Horwitz, faculty director of the Lowell Milken Center.

Joel Feuer, executive director of the Lowell Milken Institute for Business Law and Policy who worked on the program, said he thought members of the law school could provide useful information to nonprofit and philanthropic communities.

“Lawyers have a lot of information and insight into these areas,” Feuer said. “I also felt that it (the nonprofit sector) was probably underserved by both law schools and other institutions.”

The nonprofit sector is an important part of culture, economy and civic expression, making the new center important, Horwitz said.

Rose Chan Loui, the executive director of the Lowell Milken Center, said she anticipates the center working in the three main areas of education, scholarship and thought leadership.

The new research center will also introduce law students to nonprofit law, a field many do not know exists, Horwitz said.

“Many people say that they want to work in a substantive area like environment, or civil rights or healthcare,” Horwitz said. “But a lot of lawyers end up working in those areas, … (and) part of what they’re doing is acting as an expert on nonprofit governance and organization law. We hope to offer them opportunities to train in those areas.”

Feuer said the center will educate law students about what nonprofits do and how nonprofit board members think about things, which he believes will be valuable.

Loui said in addition to education, the center can help practitioners through thought leadership.

“It’s also really important to me that in the present, we are there as a resource for the nonprofits and philanthropies that are working in our world today,” Loui said. “We definitely want to be educating the next generation of philanthropic and nonprofit advisors, but I think we can do that work now.”

As a research center, it can also contribute to current scholarship, Loui said. She added that this can be accomplished by looking at how the impact and effectiveness of the nonprofit sector can be improved, and by writing articles about how laws can be changed or interpreted.

Ellen Aprill, a senior scholar in residence at the center, said there are specific ways scholarship can influence decision-making, including through influencing tax policy.

“I do at times try to persuade the IRS and Treasury (Department) to adopt certain rules, and not to adopt (others),” Aprill said. “Research as to what the IRS and Treasury, in fact, do, can be useful to nonprofit practitioners of all kinds, whether they (are) lawyers, accountants or people inside nonprofits.”

The center is well-positioned to become an active and robust institution through its research and by hosting events, Feuer said.

On Feb. 29 and March 1, the center will host the 27th Annual Western Conference on Tax-Exempt Organizations, which will cover topics such as whether nonprofits can save journalism, and takeaways from recent Supreme Court decisions.

The conferences held at the center bring people interested in studying and learning about issues in the nonprofit sector from all over the country, Horwitz said, adding that she looks forward to collaborating with others.

“My research is at the border of law and policy, and so being able to convene in a space where we bring in practitioners and regulators and scholars to work together, that’s the stuff that makes my heart sing,” Horwitz said. “The center is giving me the space to do that.”

https://dailybruin.com/2024/02/15/ucla-law-launches-the-lowell-milken-center-for-philanthropy-and-nonprofits

UCLA Law philanthropy program receives $8 million from Lowell Milken

January 16, 2024

The UCLA School of Law (UCLA Law) has announced an $8.05 million gift from alumnus Lowell Milken (JD ’73) in support of a research center that will study philanthropy and nonprofit law.

The Lowell Milken Center for Philanthropy and Nonprofits aims to brings together scholars, practitioners, nonprofit and philanthropic leaders, and policy makers to research this area of law and educate students and experts in the discipline. The center will absorb the school’s current philanthropy and nonprofits program, established in 2021 with a $3.7 million gift from Milken.

UCLA Law has named Rose Chan Loui, an expert in federal income tax and the law governing nonprofit organizations, as executive director and Jill Horwitz, UCLA’s David Sanders Professor in Law and Medicine, as the center’s faculty director.

“With [this] support, UCLA Law’s new Center for Philanthropy and Nonprofits is well situated to transform the field by training the next generation of nonprofit lawyers, developing scholarship and bringing together the nonprofit sector’s many stakeholders for events and courses in tax law, governance, [and] compliance,” said UCLA Law dean Michael Waterstone.

“We are at a unique moment in history, where members of the baby boomer generation have accumulated unprecedented wealth. That wealth is spurring revolutionary change in philanthropy and giving,” said Milken. “Ultimately, this generational wealth shift and the infusion of financial capital into the philanthropic community have the potential to create a profoundly positive impact on society. With its strong leadership in Jill and Rose, UCLA Law can ensure this impact by training the next generation of nonprofit leaders and advisors.”

(Photo credit: Wikimedia/Coolcaesar)

 "UCLA Law launches center to address ‘revolutionary change’ in philanthropy and nonprofits." UCLA School of Law press release 01/11/2024.

From <https://philanthropynewsdigest.org/news/ucla-law-philanthropy-program-receives-8-million-from-lowell-milken>

UCLA School of Law Receives Transformative $10 Million Gift

The gift, the largest in the school's history, establishes the Lowell Milken Institute for Business Law and Policy and serves as the capstone of the school's $100 million endowment campaign.

LOS ANGELES, CA, August 9, 2011—UCLA School of Law has received a transformative $10 million gift—the largest single gift in the school’s history—enabling the law school to meet and exceed its ambitious $100 million fundraising goal, well ahead of its original five-year schedule. The Campaign for UCLA School of Law was launched publicly in 2008 to increase private resources for student scholarships, to attract and retain faculty and to support centers and institutes that inform law and public policy.

The $10 million gift from 2009 Public Service Alumnus of the Year Lowell Milken ’73, a leading philanthropist and pioneer in education reform, establishes the Lowell Milken Institute for Business Law and Policy. The Institute’s creation culminates a three-year process of exploration initiated by leadership at UCLA Law with Lowell Milken to develop initiatives in business and law to serve students, faculty and the greater community through innovative research, hands-on skills training, as well as real-world problem-solving.

UCLA School of Law Dean Rachel F. Moran noted that the Lowell Milken Institute will draw on the school’s existing strengths in business law and policy, including its premier faculty and outstanding students, in addition to its long tradition of interdisciplinary collaborations. “In line with the goals of the Campaign for UCLA Law, Lowell’s generosity will enable us to initiate a range of curricular innovations, further critical research and provide financial support for students, who will become our nation’s future leaders in business law and policy,” Moran said. An expanded curriculum and enhanced training in real-world transactional skills will aid not only students but the broader legal and business communities, she added.

The $10 million gift serves as the capstone of the law school’s record-breaking $100 million campaign which, along with the Lowell Milken Institute for Business Law and Policy, led to the creation of the David J. Epstein Program in Public Interest Law and Policy, the Emmett Center on Climate Change and the Environment, the Williams Institute on Sexual Orientation Law and Public Policy (which had previously been a program), the Michael T. Masin Scholars Fund and the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. In addition, the campaign funded the school’s A. Barry Cappello Courtroom, the Bruce H. Spector Conference Room and the Bernard A. and Lenore S. Greenberg Endowed Law Review Fellow Fund.

According to Dean Moran, private philanthropy throughout the campaign more than doubled the number of endowed chairs at UCLA School of Law, including four chairs endowed by long-time supports Ralph ’58 and Shirley Shapiro, and UCLA School of Law had the highest rate of growth in alumni giving of any top 20 law school, as participation rates soared to more than 30%. Key to this success was the Law Firm Challenge, which broke new records every year under the leadership of its Founding Chair James D. C. Barrall ’75, as well as the recently created Reunion Challenge.

“As our record growth in giving demonstrates, our alumni have rallied together in unprecedented numbers under the leadership of Campaign Chairman Ken Ziffren ’65 and a team of dedicated volunteer leaders. They’ve demonstrated their commitment to UCLA School of Law’s longstanding traditions of excellence, innovation, access and service. This critical campaign and the transformative gift from Lowell Milken show that our students, alumni, and friends share the vision and values that define us as a great public law school, and their ongoing support will help us to overcome the often dour predictions prompted by the state and national budget crisis.”

Private philanthropy is vital to preserving the longstanding tradition of serving the community and the greater good, a commitment integral to the mission of both the law school and the UCLA campus. “This generous gift will deepen UCLA Law’s already strong impact on the vibrant Los Angeles legal and business communities and help prepare students with the training they need to meet the challenges of today’s global and entrepreneurial economy,” said UCLA Chancellor Gene Block. “Through groundbreaking research, as well as symposia and conferences, the Lowell Milken Institute will facilitate the kind of sustained dialogue with policymakers and practitioners that is UCLA’s hallmark as a public university.”

Alumni and philanthropists increasingly are recognizing this imperative. “At a time when our state’s great universities are under significant financial pressure and constraints, it is incumbent upon those of us who benefitted greatly from our educational experiences within the UC system to help support the outstanding work of these universities,” said Milken, who graduated Phi Beta Kappa and summa cum laude from the University of California, Berkeley, where he received the School of Business Administration’s Most Outstanding Student award. At UCLA School of Law, he earned his degree with the distinction of Order of the Coif and UCLA Law Review.

As chairman and co-founder of the Milken Family Foundation, Lowell Milken’s dedication to education reform has been informed by more than three decades of education research, policy and practice, as well as firsthand visits to thousands of classrooms. Milken created the Milken Educator Awards in 1985, the nation's most prominent teacher-recognition program. In 1999, he founded TAP™: The System for Teacher and Student Advancement, a proven, comprehensive school reform now active in 13 states to attract, develop, motivate and retain the best talent to the American teaching profession. He also was instrumental in the establishment of High Tech Los Angeles, a public charter high school that engages students through self-directed learning, collaborative projects and real-world internships.

An international businessman, Lowell Milken is co-founder of Knowledge Universe, the world’s largest early childhood education company. Headquartered in Singapore, Knowledge Universe operates worldwide with more than 38,000 employees. Milken is also chairman of London-based Heron International, a world-wide leader in property development.

About UCLA School of Law and the Campaign

Founded in 1949, UCLA School of Law is the youngest major law school in the nation and has established a tradition of innovation in its approach to teaching, research and scholarship. With approximately 100 faculty and 970 students, the school pioneered clinical teaching, is a leader in interdisciplinary research and training, and is at the forefront of efforts to link research to its effects on society and the legal profession.

In April 2008, UCLA School of Law publicly launched the $100 million Campaign for UCLA School of Law — the largest fundraising effort in the school's history — to increase funding for student scholarships and to attract and retain a world-class faculty. In addition, the campaign also seeks funding to expand academic courses and support law school clinics, centers and programs that inform law and public policy.

For more information, visit www.law.ucla.edu.

From <https://www.lowellmilken.org/press-releases/ucla-school-of-law-receives-transformative-10-million-gift>

WIKIPEDIA Michael SCHILL - 

Penn Law-Wharton - 1987

NYU Law - 1995

UCLA Law Dean (financial rainmaker) 2004 to 2009

U. of Chicago Law

U. OREGON - President  (2018 to 2022

NORTHWESTERN - 2022 to present

Source Wikipedia

In 1987, Schill joined the faculty at the University of Pennsylvania Law School and the Wharton School. He served as assistant professor of law from 1987 to 1992, and became professor of law in 1992. From 1993 to 1995 he was professor of law and real estate. [great for financial donations]

In 1995 he moved to the New York University School of Law and Wagner School of Public Service, becoming professor of law and urban planning. [aka real estate]

• Simultaneously, he became the founding director of the Furman Center for Real Estate and Urban Policy. 

• He held both positions until 2004, and in 2003 he additionally became the Wilf Family Professor in Property Law.[3]

UCLA - 2004 to 2009

In 2004, Schill became dean and professor of law at the University of California, Los Angeles School of Law.[7] During his five and one-half years at UCLA, Schill recruited leading legal scholars from top schools across the nation and established thirteen endowed chairs. He launched three new legal research centers and two academic specialization programs.

Alumni participation in fundraising doubled during his decanal tenure, and private philanthropy tripled.[8] Schill served as chair of the Council of Professional School Deans and sat on the UCLA Chancellor's Executive Committee.[3]

U. Chicago Law 2010 to 

During Schill's tenure as dean of the University of Chicago Law School in 2010, the law school expanded its faculty, increased incoming student credentials to record levels, doubled fundraising and established new centers and curricula in law and economics, business leadership and public interest law. In addition to serving as dean of the law school, Schill was appointed professor in the college, where he taught a course in law and urban problems.

From <https://en.wikipedia.org/wiki/Michael_Schill>

UCLA Law dean Michael Schill to resign, head law school at University of Chicago

By Office of Media Relations

September 08, 2009

The following letter from UCLA Chancellor Gene D. Block was sent Sept. 8, 2009:

Dear Colleagues,

It is with a sense of loss for UCLA that Scott Waugh and I share with you the news that Michael Schill, dean of the UCLA School of Law, has announced his intention to resign at the end of the calendar year to become dean of the University of Chicago Law School.

Under Mike's leadership over the last five-plus years and through his passionate commitment to excellence, the UCLA School of Law has advanced in a number of important ways. It has received a record number of applications and enhanced the academic culture among students, recognizing achievement and substantially increasing the number of judicial clerkships obtained by students. The credentials of the class of 2012 are stronger than those of any previous class.

During this time, the school also has established two new research centers, begun three new academic programs and expanded the graduate program in law. A $100 million endowment campaign begun last year — the school's first — has already achieved more than 65 percent of its goal.

Mike has enhanced UCLA's excellence by recruiting faculty from some of the nation's leading law schools, as well as establishing 13 endowed chairs. During his tenure, the school has increased its racial and ethnic diversity among students.

During the coming week, Scott and I will meet with the leadership of the law school to discuss plans for the future. We are confident that the school will continue to thrive, building upon the solid foundation that Mike and his colleagues and predecessors have built.

On behalf of UCLA leadership and the entire university, we want to thank Mike for his exemplary service and extraordinary contributions and wish him every success in his new endeavor.

Sincerely,

Gene D. Block

Chancellor

From <https://web.archive.org/web/20100627063728/http://newsroom.ucla.edu/portal/ucla/michael-schill-101411.aspx?ncid=5371>

Schill explains school’s silence on Israel war

NU President Michael Schill.

While personally condemning murders of Israelis by Hamas, Northwestern University President Michael Schill says the university itself will not be making any comment.

In a message to NU senior leadership, Schill says he and the school’s provost have been asked about a possible university statement on the war in Israel.

The NU president notes that he attended a Vigil for Israel on campus on Monday night, however, that was as “Mike Schill,” individual, and not as NU taking a position.

Schill’s message says “I am deeply repulsed, sickened and disappointed by what Hamas has done. Kidnapping, beheading, murdering people … is horrific and inhuman. Pure and simple. This sort of behavior is entirely unacceptable regardless of one’s political convictions or grievances. Period. No moral equivalencies needed.”

The NU leader said, “This is the view of Mike Schill, citizen, Jew, and human being. I didn’t give up those parts of me when I assumed the presidency of Northwestern.”

However, Schill says if he puts out an official statement as the president of Northwestern, people see that as the university’s position.

He says, “We are a University which celebrates free expression, diversity of people and diversity of viewpoints. This is essential to our role in society. The university does not speak for our students, faculty, and staff on these matters…. For me to speak for them displaces their own freedom to speak.”

Across the country some university leaders have issued statements on their schools’ behalf on the Israel-Hamas war, while others have refrained from doing so. Either approach has led to criticism.

Schill notes that regardless of what may have happened at NU in the past, “I do not foresee that I will be issuing statements on political, geopolitical or social issues that do not directly impact the core mission of our University, the education and futures of our students, or higher education.”

Schill notes that his position may be controversial.

“This reticence to speak out as President Michael Schill will sometimes please and often infuriate members of our community. But I believe it is the right approach.”

Schill’s comments have been linked by the campus Jewish center, Northwestern Hillel, to an email to its members, for their information.

The Hillel email says that the organization “is taking steps to ensure the physical safety of our students, our community, and our Hillel building.”

It notes that there has been a call by some pro-Palestinian groups for “days of Palestinian resistance.”

However, it says there have been no credible threats here or in the U.S., but “we are raising our level of alert” by working closely with Northwestern and Evanston police, with private security, and “we have requested increased support from these security partners to ensure the safety of all of our community members.”

Hillel students organized a Monday Vigil with 400 people praying for those who were killed, injured, and held hostage.

The organization is also providing “round the clock advising and pastoral care to NU Jewish students, and has also been in touch with parents.

The Hillel leaders say they are “overwhelmed with compassion for all innocent victims.”

“We detest oppression and hate in all forms,” and it is vital to “see each other’s humanity and stand in solidarity with all those facing discrimination and inequality.”

Those who hold these values, the Hillel statement continues, “must be capable of condemning Hamas’ attack on Israel while simultaneously mourning the loss of life and supporting a peaceful resolution to this conflict.”

eff Hirsh

jeff@evanstonnow.com

Jeff Hirsh joined the Evanston Now reporting team in 2020 after a 40-year award-winning career as a broadcast journalist in Cincinnati, Ohio. More by Jeff Hirsh

From <https://evanstonnow.com/schill-explains-schools-silence-on-israel-war/>

UO-2021JUNE2 President Schill condemns anti-Semitic violence, harassment

June 2, 2021 -

UO President Michael H. Schill sent the following message to the campus community June 2:

Dear University of Oregon community,

All too often over the past five years, I have written to the campus community condemning violence and expressions of hatred targeted to particular groups. Today, I write not just as the president of the university, but also as a member of a group that is the object of hatred. Violence against the Jewish people has existed for centuries and in recent years has accelerated with the growth of white supremacy. In the past couple of weeks, fighting in the Middle East has unleashed a new wave of anti-Semitic sentiment — from hateful language scrawled on walls to vicious acts of violence. 

The Israeli-Palestinian conflict is complex. Whatever your views about this ongoing tragedy, nothing justifies either verbal or physical attacks against innocent people based upon their religion, regardless of whether they believe in Judaism, Islam, Buddhism, Hinduism, Christianity, or something else. We must stand up to hatred against people based on religion, race, national origin, gender and gender expression, or who they love.

Throughout history we have learned that silence in the face of evil begets more evil. The end of bigotry and racism starts with each of us, individually, lifting our voices. Please join me in condemning the recent wave of anti-Semitic violence and hatred. Our nation is better than this.

Michael H. Schill

President and Professor of Law

From <https://around.uoregon.edu/content/president-schill-condemns-anti-semitic-violence-harassment>

UCLA School of Law Deans

From <https://law.ucla.edu/about-ucla-law/history/past-deans>

UCLA School of Law Deans

Home Page

About UCLA Law

History

Current Dean 

MICHAEL WATERSTONE (J) - BIO

Past Deans

Russell Korobkin (Interim) (J)

2022–Present

Jennifer L. Mnookin (j)

2015–2022

Rachel F. Moran (J)

2010–2015 

Stephen C. Yeazell (Interim)

2009–2010

Michael H. Schill (J)

2004–2009

Norman Abrams (Interim) (J)

2003–2004

Jonathan D. Varat

1998–2003

--Message from Dean 1999 UCLA Law Mag

Susan Westerberg Prager (J)

1982–1998

--Deans busts on Diversity under the guise of standards

William D. Warren

1975–1982

--In memorium UC

--In memorium UCLA Law  - bankruptcy law leader

(6/6/2017) Uof Il Urbana-Champaign

UCLA Dean Emeritus William Warren passed away on May 30, 2017 at his home in Santa Monica, California. Bill was a giant in legal education and in his chosen fields of bankruptcy and commercial law.

Murray Schwartz (J)

1969–1975

Richard C. Maxwell

1958–1969

wiki - Maxwell did oil & gas law

in memorium UCLA - Maxwell joined the UCLA law faculty in 1953, four years after the school opened. He served as dean of the school from 1958 to 1969, and remained on the faculty until 1981. An expert in oil and gas law, Maxwell was an editor of the Oil and Gas Reporter for more than 30 years. He was awarded the UCLA Distinguished Teaching Award in 1976 and the UCLA Medal in 1982.

in memorium Duke

Oral History with Maxwell On UCLA Law's History

L. Dale Coffman

1949–1957

Past Deans

From <https://law.ucla.edu/about-ucla-law/history/past-deans>

Milken’s Gift Stirs Dispute at U.C.L.A. Law School

By Julie Creswell and Peter Lattman August 22, 2011 8:34 pm August 22, 2011 8:34 pm

Milken Family FoundationLowell Milken helped create the booming junk bond market of the 1980s.

When the U.C.L.A. School of Law announced a $10 million gift from Lowell Milken to establish a business law institute in his name earlier this month, the university described him as a “pioneer in education reform” and a “leading philanthropist.”

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. While many faculty members welcomed the money, one of the University of California, Los Angeles’s top business law professors has said the gift poses deep ethical problems and reputational risks, given Mr. Milken’s run-in with securities regulators two decades ago.

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

Ms. Stout, a specialist in corporate governance and moral behavior, said in an interview last week, “I think it’s somewhat distressing that so few people seem to be aware of Lowell and Michael Milken’s business history.”

The Milken name is still a lightning rod on Wall Street and in legal circles. Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

As part of a settlement in a related civil matter, the Securities and Exchange Commission permanently barred the two brothers from the securities industry.

Lowell Milken did not admit to any wrongdoing.

Kenneth W. Graham Jr., a retired U.C.L.A. law professor, said it was a mistake to take the gift from Mr. Milken, a 1973 graduate of the school and longtime donor to it. “To say that I was outraged would be something of an understatement,” wrote Mr. Graham in an e-mail.

But other U.C.L.A. law professors disagree with the objections and are thrilled with Mr. Milken’s largess. Since their legal woes, the Milken brothers have become prominent philanthropists, donating hundreds of millions of dollars to a variety of causes, most notably in the areas of medical research and education.

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said.

The current debate surrounding Lowell Milken’s gift highlights the quandary that public universities across the country face as the fiscal woes of states have forced them to look increasingly to private corporations and wealthy alumni for financial support. Law schools are typically among a state school’s most profitable graduate programs.

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education,” said Stephen Bainbridge, a U.C.L.A. corporate law professor. “If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.”

When asked to respond to complaints about Mr. Milken’s gift, Bonnie Somers, a spokeswoman for the Milken Family Foundation, issued a written statement.

“Basic fairness requires that individuals be evaluated solely on the basis of their own conduct and Lowell Milken’s life of accomplishment and service speaks for itself,” her statement said. She added that the foundation respected the fact that U.C.L.A. “understands that in the United States of America, its citizens are presumed innocent until proven otherwise.”

Lauri Gavel, a law school spokeswoman, also issued a written statement: “Only one member of the business law faculty has expressed anything less than gratitude — and that concern was surprising, given that this professor was involved early in the process, has been a beneficiary of the donor’s philanthropy, and did not raise objections until quite recently.”

This is not the first time a Milken has generated controversy at U.C.L.A. In 1994, the university severed its ties with an education company controlled by Michael R. Milken that planned to sell videotapes of a lecture series he gave at the school. The company agreed to remove any identification of U.C.L.A. from the tapes after the school said it received many complaints from state officials who did not want the university’s name associated with Mr. Milken.

While Lowell Milken’s gift was the capstone of the law school’s $100 million fund-raising campaign, several other benefactors made donations and in return had buildings, conference rooms, professorships and scholarship funds named in their honor.

Mr. Milken is not the only leading donor in the current campaign that has tussled with regulatory authorities. The capital drive also led to the creation of the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. The Resnicks are the Beverly Hills beverage industry entrepreneurs who own Fiji Water and Pom Wonderful.

Last fall, the Federal Trade Commission filed a civil lawsuit against the Resnicks, accusing them and their company, Pom Wonderful, of making “false and unsubstantiated claims” that their pomegranate juice product helped reduce the risk of heart disease and erectile dysfunction.

Jill Gottesman, a spokeswoman for Pom Wonderful and the Resnicks, which are fighting the charges, has called the government’s allegations “completely unwarranted.”

Law professors unaffiliated with U.C.L.A. say that even though the economic environment makes it challenging for public schools to finance vital programs, they need to consider the potential risks in accepting private money. Thane Rosenbaum, a law professor at Fordham University, said that U.C.L.A.’s gifts from Mr. Milken and the Resnicks reflect a kind of “academic cynicism.”

“Here is a major law school, with state funding in California deteriorating, now taking its money from people engaged in questionable behavior,” said Mr. Rosenbaum. “It’s unbecoming to a great university.”

Other schools have in the past refused money, or taken other actions, when their benefactors have become involved in corporate wrongdoing. In the 1980s, Princeton returned money from Ivan Boesky to build a Jewish Center after the government charged the Wall Street financier with insider trading crimes. Seton Hall removed the name of L. Dennis Kozlowski from an academic building in 2005, after the conviction of the former Tyco chief executive for looting his company.

Inside the halls of U.C.L.A., the protests of Ms. Stout, a tenured professor whose most recent book is “Cultivating Conscience: How Good Laws Make Good People,” has caused consternation among her colleagues.

Mr. Bainbridge, the corporate law professor, said that though he considered Ms. Stout a friend, he disagreed with her position.

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person,” said Mr. Bainbridge.

“I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

From <https://archive.nytimes.com/dealbook.nytimes.com/2011/08/22/milkens-gift-provokes-dispute-at-u-c-l-a-law-school/>

Should UCLA Law School Accept Milken's Millions?

Ah, California. Your weather is amazing, but we don't want to deal with your earthquakes. Over at UCLA Law School, they're experiencing some earth-shaking controversy of their own. An ultra-wealthy alumnus made it rain, with a $10 million gift to the school -- but now some professors want to rain on his parade, and their objections have hit the national news media....

By David Lat  

onAugust 23, 2011 at 6:13 PM

Ah, California. Your weather is amazing, but I don’t think I could deal with your earthquakes. The tremor we just experienced here on the East Coast has turned me into a nervous wreck.

Over at UCLA Law School, they’re experiencing some earth-shaking controversy of their own. An ultra-wealthy alumnus made it rain, with a $10 million gift to the school — but now some professors want to rain on his parade, and their objections have hit the national news media. (Apologies for the mixed precipitation metaphors.)

As we mentioned last week, UCLA law alumnus Lowell Milken made a $10 million gift to his alma mater — the largest single donation in the law school’s history. The money will be used to establish the Lowell Milken Institute for Business and Law.

Milken, Milken — that last name sounds familiar….

Yes, that’s right — Lowell Milken is the brother of that Milken, infamous white-collar criminal Michael Milken, former junk bond king and poster boy for 1980s Wall Street excess. The brothers’ connection is causing controversy, as reported by Julie Cresswell and Peter Lattman in the New York Times:

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. While many faculty members welcomed the money, one of the University of California, Los Angeles’s top business law professors has said the gift poses deep ethical problems and reputational risks, given Mr. Milken’s run-in with securities regulators two decades ago.

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

With all due respect, Professor Stout, you are the Paul Hastings Distinguished Professor of Corporate and Securities Law. Paul Hastings is one of the country’s finest firms, but even it has had its share of less-than-distinguished moments.

Back to the Milken controversy. For those of you not old enough to remember the eighties (well, at least the non-Madonna parts):

The Milken name is still a lightning rod on Wall Street and in legal circles. Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

As part of a settlement in a related civil matter, the Securities and Exchange Commission permanently barred the two brothers from the securities industry. Lowell Milken did not admit to any wrongdoing.

That last part is worth noting. Even though Michael Milken went to prison, Lowell Milken — the person actually making the $10 million gift — was never convicted of anything. As Bonnie Somers, a spokeswoman for the Milken Family Foundation, told the Times, “Basic fairness requires that individuals be evaluated solely on the basis of their own conduct, and Lowell Milken’s life of accomplishment and service speaks for itself…. [To its credit, UCLA] understands that in the United States of America, its citizens are presumed innocent until proven otherwise.”

Shouldn’t that settle matters? Not as far as Professor Stout is concerned — and she’s not alone. A retired UCLA law professor, Kenneth W. Graham Jr., described himself as “outraged” over the gift. It could be argued — and presumably this is the basis for the objections — that even if Lowell wasn’t convicted, perhaps thanks to his brother’s willingness to take the fall, some of the Milken millions should be seen as ill-gotten gains. As a Fordham law professor, Thane Rosenbaum, told the Times, UCLA is essentially “taking its money from people engaged in questionable behavior…. It’s unbecoming to a great university.”

In this economy, though, should law schools be looking gift horses in the mouth? The objectors appear to be in the minority, at least at UCLA Law:

[O]ther U.C.L.A. law professors disagree with the objections and are thrilled with Mr. Milken’s largess. Since their legal woes, the Milken brothers have become prominent philanthropists, donating hundreds of millions of dollars to a variety of causes, most notably in the areas of medical research and education.

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said.

The current debate surrounding Lowell Milken’s gift highlights the quandary that public universities across the country face as the fiscal woes of states have forced them to look increasingly to private corporations and wealthy alumni for financial support.

Indeed. The University of California system has suffered greatly during the Great Recession and its aftermath. As you may recall, the UC Regents recently hiked student fees for the coming academic year. To its credit, UCLA Law essentially neutralized that increase, by issuing immediate scholarships to the entire student body, in the exact amount of the hike.

But that money ultimately has to come from somewhere, right? What’s wrong with milkin’ a Milken?

That seems to be the pragmatic view of Professor Stephen Bainbridge, who made the following comments to the Times:

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education. If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.”

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person. I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

Over at his blog, Professor Bainbridge offers additional analysis of the Milken gift, focusing on the underlying events from the 1980s. He emphasizes that Lowell Milken was never convicted of anything and that “the government used threats to go after Lowell as one of the ways on which they coerced Michael into taking a plea deal.” Read the full post over here.

Readers, what do you think? Take our reader poll below, and share your views in the comments.

P.S. We realize that we’ve been running a lot of reader polls around here lately — see, e.g., here (what caused the earthquake), here (views of “ScamProf”), and here (“all right” versus “alright”) — but that’s part of the fun of running an interactive website. It’s neat to tee up an issue and get an immediate read on public opinion. Reading comments can serve that purpose too, but as we often tell people, commenters are not a representative sampling of our entire readership.

Should UCLA Law School accept Lowell Milken's $10 million gift?

• Yes - it's all about the benjamins, baby.

• No - that's tainted money.

From <https://abovethelaw.com/2011/08/should-ucla-law-school-accept-milkens-millions/>

NY Times on the Milken gift to UCLAW

The NY Times reports that:

When the U.C.L.A. School of Law announced a $10 million gift from Lowell Milken to establish a business law institute in his name earlier this month, the university described him as a “pioneer in education reform” and a “leading philanthropist.”

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. ...

Wrong. There is no debate. Only one active member of the faculty is complaining:

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

Despite the Times' implication that there's some sort of debate roiling the halls, the truth is that everybody else is supportive of and appreciative of the gift:

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said. ...

Lauri Gavel, a law school spokeswoman, also issued a written statement: “Only one member of the business law faculty has expressed anything less than gratitude — and that concern was surprising, given that this professor was involved early in the process, has been a beneficiary of the donor’s philanthropy, and did not raise objections until quite recently.”

Oddly, the Times reporters decided to also drag another gift to the law school--one wholly unrelated to the Milken gift--into the alleged debate:

The capital drive also led to the creation of the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. The Resnicks are the Beverly Hills beverage industry entrepreneurs who own Fiji Water and Pom Wonderful.

Last fall, the Federal Trade Commission filed a civil lawsuit against the Resnicks, accusing them and their company, Pom Wonderful, of making “false and unsubstantiated claims” that their pomegranate juice product helped reduce the risk of heart disease and erectile dysfunction.

Jill Gottesman, a spokeswoman for Pom Wonderful and the Resnicks, which are fighting the charges, has called the government’s allegations “completely unwarranted.”

Is the implication that unproven charges are supposed to have the law school blacklist a donor? I don't think so, but maybe the Times thinks (a) the donor is guilty until proven innocent and therefore (b) the law school is guilty by association.

The Times story points to several occasions on which universities have given back gifts:

In the 1980s, Princeton returned money from Ivan Boesky to build a Jewish Center after the government charged the Wall Street financier with insider trading crimes. Seton Hall removed the name of L. Dennis Kozlowski from an academic building in 2005, after the conviction of the former Tyco chief executive for looting his company.

But those cases aren't on point. Boesky and Kozlowski were convicted of crimes. Lowell Milken was never charged with a crime. To be sure, the Times tries to spin that as a problem:

Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

Some of us who were active in the field at the time--as I was--remember the story a bit differently. In our view, the government used threats to go after Lowell as one of the ways on which they coerced Michael into taking a plea deal.

As for the Milkens and their time at Drexel, Daniel Fischel's book Payback: The Conspiracy to Destroy Michael Milken and His Financial Revolution is sadly out of print but can be acquired as a used book and provides a useful contrarian account of the period. As Christopher Faille summarized Fischel's argument in a review (42-DEC FEDRLAW 45):

In the 1980s, the government frequently prosecuted individuals for insider trading even though they had come by market-useful information through no such underhanded means, but rather by inference from publicly accessible sources, diligently studied. On dubious statutory authority, the government began to contend that the simple possession of information, not generally available to those members of the investing public without an opportunity for diligent study, can render a trader a tainted “insider.” This taint, in turn, renders any exchange in the stock of a takeover-targeted firm a crime. It was against criminals of that alleged stripe that Rudolph Guiliani -- then U.S. Attorney for the Southern District of New York, now the mayor of New York City -- waged his high-profile holy war, which Fischel calls a “Reign of Terror.” It was pursuant to that, that he “got” Michael Milken. ...

It is not any sympathy for [Michael] Milken that should motivate a reaction against Giuliani's terror. Milken, after all, seems to have survived his imprisonment rather well, and (in a development too recent for inclusion in Fischel's book) has received a large consulting fee from Ted Turner for his part in negotiations between that communications magnate and the executives at Time-Warner. What ought to motivate a reaction is that the government of the United States has thrown the sporadic and unpredictable exercise of its coercive powers into the thick of boardroom conflicts, and has done so precisely in order to protect the grave inefficiencies that exist at the heart of our system of production. It has done so by criminalizing precisely the sort of trading that most threatens such inefficiency: trading by or in support of suitors in a takeover bid.

This is not to fully endorse Fischel's account. As Tom Smith has observed (22 Law & Soc. Inquiry 1041):

Fischel fails to persuade me of [Michael] Milken's innocence. ...

I complain above about Fischel's lack of objectivity in Payback, yet I must concede that what this takes away in the power to persuade, it makes up for in the power to fascinate. Fischel is especially passionate and effective in responding to the ridiculously overheated claims of journalists that Milken was some kind of Nazi (Barron's) or one of the greatest criminals of all time (Wall Street Journal reporter James Stewart).

Fischel is so angry in Payback, in fact, that he discusses things one normally omits for propriety, yet that probably need saying. For example, Fischel, more than any other writer I know of, accurately captures the class and ethnic (mostly anti-Semitic) animosity that underlay some of the bitterness of the political fight over the corporate control market. Milken, T. Boone Pickens, Carl Ichan, and the other control-market pioneers also came largely from modest, or at least not wealthy, backgrounds. They were not likely to fit in at Chase Manhattan or Dillon Read. ...

Payback is a strange book. The book strives at times for academic objectivity and respectability, but then gives in entirely to passionate advocacy for Milken and what Fischel thinks he stands for. He excoriates the unfair treatment Milken got from the press and prosecutors, but freely attacks the personal integrity of prosecutors and judges, often with less than convincing support. Fischel introduces the book with broad themes of economics, but leaves them quickly behind to give us the blow by blow of the prosecution and defense of Milken, Keating, and the other defendants.

Yet, for all these contradictions, the book is a tour de force. It is not really a scholarly effort, though only a brilliant scholar could have written it. Payback is really an indictment of Giuliani and the judges, politicians, and journalists who helped him bring Milken down.

At the very least, however, one can say that the history of the 1980s takeover market simply doesn't lend itself to nice, tidy ethical stories that have obvious implications for the standing today of those who were players in that era.

As for me, where do I stand on the supposed debate? I stand by what I told the NY Times reporters:

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education,” said Stephen Bainbridge, a U.C.L.A. corporate law professor. “If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.” ...

Mr. Bainbridge, the corporate law professor, said that though he considered Ms. Stout a friend, he disagreed with her position.

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person,” said Mr. Bainbridge.

“I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

From <https://www.professorbainbridge.com/professorbainbridgecom/2011/08/ny-times-on-the-milken-gift-to-uclaw.html>

2020Dec03 Press Release | Announcing the Lowell Milken Center for Music of American Jewish Experience at UCLA

Housed in the UCLA Herb Alpert School of Music, the new Lowell Milken Center for Music of American Jewish Experience will foster artistic creativity, scholarship, performance and other cultural expression, thanks to a $6.75 million gift from the Lowell Milken Family Foundation.

“The Lowell Milken Center for Music of American Jewish Experience will unite the academic and the artistic, showcasing the artists, scholars and educators who reveal to us the authentic voice of our shared humanity and the inexhaustible call toward our noblest self,” said Eileen Strempel, dean of the school of music.

“We are incredibly grateful to Lowell Milken for his generous gift to endow this center, which builds on our latest learnings, establishes a standard of excellence and an enduring infrastructure at UCLA for music of American Jewish experience, and gives us the ability to plan more ambitious initiatives for years to come.”

The new center is a natural extension of the Milken Archive of Jewish Music, which was founded by Milken in 1990 to record, preserve and disseminate music inspired by more than 350 years of Jewish life in the United States.

“From the outset, our vision was to create a living archive making education central to our mission. The partnership with the UCLA Herb Alpert School of Music positions the new center as a global leader in the field of music of American Jewish experience,” Milken said.

The Lowell Milken Center also builds on the Lowell Milken Fund for American Jewish Music at UCLA. That fund’s establishment, in 2017, enabled the school of music to begin its collaboration with the Milken Archive and build a track record that opened the door to the more expansive center. The fund has produced a diverse calendar of concerts, lectures and projects, ranging from klezmer workshops to large choral and orchestral performances to artist residencies and commissions of new music.

Its inaugural program, “American Culture and the Jewish Experience in Music,” featured the world premiere of the oratorio “David’s Quilt,” along with programs in conjunction with the UCLA Alan D. Leve Center for Jewish Studies.

The fund also produced the UCLA American Jewish Music Festival in March, which culminated in the “Titans of Jewish Music” concert in Royce Hall with performances by various UCLA ensembles. Additionally, a partnership with the national Cantors Assembly enabled UCLA to launch an adult education curriculum designed to engage participants in music of North American Jewish experience.

From <https://www.lowellmilken.org/press-releases/announcing-the-lowell-milken-center-for-music-of-american-jewish-experience-at-ucla>

UCLA and Milken Archive launch

Lowell Milken Center for Music of American Jewish Experience

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The Lowell Milken Center is currently producing videos on subjects including the story of “David’s Quilt,” a concert work by 15 composers of different backgrounds and styles, and insights on the scope of music showcased in the UCLA American Jewish Music Festival. [Insert details on videos and where to view them once finalized.] Once public health conditions allow, the center also plans to hold a concert to celebrate its opening.

“Over the past three years, Lowell Milken has enabled our exploration of the intricate ways in which music reflects and shapes the diverse American Jewish experience,” said Mark Kligman, UCLA’s Mickey Katz Professor of Jewish Music, who will direct the new center. “The Lowell Milken Center for Music of American Jewish Experience will expand these efforts at UCLA and into the community, and will enhance the field of American Jewish music on an international scale.”

A graduate of UCLA School of Law, Milken is an international businessman and philanthropist who chairs National Realty Trust, the largest property owner of early childhood centers in the U.S., and London-based Heron International, a worldwide leader in property development. Known for his philanthropy in education, music and design, he has long supported UCLA and previously gave to establish the Lowell Milken Institute for Business Law and Policy at UCLA School of Law and the Lowell Milken Family Centennial Scholars Endowed Scholarship Fund for student-athletes.

Milken received an honorary doctorate from Hebrew Union College, and his work through the Milken Archive to preserve Jewish heritage and culture was recognized by the Jewish Theological Seminary on the 65th anniversary of Kristallnacht.

Since 1990, the Milken Archive has engaged an international roster of artists, composers and experts of different faiths and disciplines to share sacred and secular music, much of which was undiscovered or in danger of being lost. Engaging an equally global audience, the Milken Archive has completed more than 600 recordings, 200 oral histories and a series of 50 award-winning albums on the Naxos American Classics label.

From <https://www.lowellmilken.org/press-releases/announcing-the-lowell-milken-center-for-music-of-american-jewish-experience-at-ucla>

UCLA Receives $1.5 Million from Lowell Milken Family Foundation To Advance American Jewish Music

Gift is largest donation made to a university to support Jewish music research and performance

April 6, 2017

SANTA MONICA, CA — The UCLA Herb Alpert School of Music has received a $1.5 million gift from the Lowell Milken Family Foundation to establish the Lowell Milken Fund for American Jewish Music. The fund will enable the school to build on the work of the Milken Archive of Jewish Music, a collection of recordings, scores and historical materials that document the Jewish experience in America over the past 350 years.

The Milken Archive of Jewish Music was founded in 1990 by Lowell Milken with a vision to record, preserve and disseminate the music born of and inspired by Jewish life in America. It has grown to include more than 600 recordings by 200 composers, complemented by more than 800 hours of oral history recordings, videos, photographs and scholarship. Deemed "the most comprehensive documentation, ever, of music reflecting Jewish life and culture in America"by the Chicago Tribune, the Santa Monica-based archive has earned ASCAP and Grammy awards.

Now, as an academic partner to the archive, the Herb Alpert School of Music will use the fund to advance and advocate for the field of American Jewish music by contributing to research, scholarship and programs in the field at the undergraduate, graduate and faculty levels, while presenting concerts and symposia to engage and educate the community.

"Our goal is to advance cutting-edge research, artistic creativity and interdisciplinary collaboration,"Milken said. "The Milken Archive is a living project, and I believe the UCLA Herb Alpert School of Music is uniquely positioned to further both our mission and our impact on current and future generations."

The newly appointed academic director of the fund is Mark Kligman, who holds the school's Mickey Katz Endowed Chair in Jewish Music.

"There has never been a concerted effort to significantly research or study American Jewish music,"Kligman said. "With the establishment of this fund, Jewish music—and its history and development—will be given the attention it deserves as an integral part of the American music experience."

The fund's inaugural program, American Culture and the Jewish Experience in Music, will be held in November. The three-day conference, which will be co-presented with the UCLA Alan D. Leve Center for Jewish Studies, will focus on the long-term continuities that American flexibility and enterprise have made available to Jewish performers, composers, cantors, collectors and thinkers. It will feature performances of new compositions, panel discussions and lectures on heritage, innovation and interactivity.

"This gift substantially advances our commitment to the field of Jewish music,"said Judith Smith, dean of the music school. "Bringing together academic scholarship with performances and community events, the gift embraces and leverages the unique advantages of the school's three departments: ethnomusicology, music and musicology."

Milken graduated from the UCLA School of Law in 1973 and is among UCLA's most generous supporters. His many contributions to UCLA over the past quarter-century include a transformative $10 million gift in 2011 to the law school, which established the Lowell Milken Institute for Business Law and Policy. The largest single gift in the law school's history, it enabled the school to surpass a $100 million fundraising goal well ahead of the original five-year schedule. The donation was followed by another $5 million gift in 2014.

In 2016, UCLA was honored again when Milken donated $1 million for the Lowell Milken Family Centennial Scholars Endowed Scholarship Fund, which provides substantive support to some of the campus's nearly 700 student-athletes as they pursue their degrees. The gifts have been part of the $4.2 billion UCLA Centennial Campaign, which is scheduled to conclude in December 2019 during UCLA's 100th anniversary year.

About the Milken Archive of Jewish Music

Founded in 1990 by philanthropist Lowell Milken, the Milken Archive of Jewish Music reflects the scope and variety of Jewish life in America. The Archive's virtual museum http://www.milkenarchive.org is an interactive guide to music, videos, oral histories, photos and essays.

Connect with us on Facebook at www.facebook.com/MilkenArchive and on Twitter at www.twitter.com/milkenarchive.  

Bonnie Somers

(310) 570-4770 (office)

(818) 307-3111 (cell)

bsomers@mff.org

From <https://www.mff.org/newsroom/press-releases/view/ucla-receives-1-5-million-from-lowell-milken-family-foundation-to>

Debt worries ripple through Milken’s dealmaking soirée

8 May 2023 | Financial Times

[between the lines, we see Berkshire piling up cash waiting to pounce on under-valued assets or distressed assets when the shit hits the fan. On the other side, the LBO/PE crowd is constrained in deal-making due to much higher financing costs--and hints at slow-moving catastrophe as firms struggle to cover their debt-service--which is as Milken points out an opportunity for firms with 'dry-powder' aka cash-on-hand to scoop up possibly cheap debt like Shutterfly] - B.C.Gobin

In today’s newsletter

• Dealmakers warn of debt woes

• Investors get to know Buffett’s successor 

Masters of the universe worry higher rates will empty their pockets

At Mastro’s steakhouse last Monday, Michael Milken had a unique way of describing a disconnect hanging over the $10 trillion private capital industry. The junk bond king whose Drexel Burnham Lambert catapulted the careers of many Wall Street billionaires, shared an anecdote about photography group Shutterfly.

An Apollo Global fund Milken owns had marked its investment in the company at about the cost it paid to take it private in 2019, but Milken noticed that its loans were trading at about 40 cents on the dollar.

If Shutterfly’s equity was worth full value and its senior loans were trading at distressed levels, maybe Apollo should buy more of its debt, Milken joked at the dinner held during his eponymous conference in Beverly Hills. It was a good way of explaining the “suspended animation” many feel in private markets as surging interest rates have altered the calculus of an epic wave of buyouts. The costs are rippling through leveraged balance sheets, but markdowns, distressed sales or restructurings have only been episodic.

In public panels and private meetings at the Milken Institute Global Conference last week, financiers said times would soon change. The stresses of higher debt costs are setting in. “I still think people are too happy here,” said Katie Koch, chief executive of bond manager TCW Group. “Things will get worse and there will be massive opportunities. The greatest wealth creation opportunities come out of a recession and excesses.”

It is basic maths that increasingly gnaws at the masters of the universe. Steven Tananbaum, founder of GoldenTree Asset Management, presented an analysis that showed the typical leveraged buyout had seen its interest costs as a percentage of operating cash flow rise by 50 per cent, while coverage ratios had fallen by a similar measure.

Base rates, once zero, are more than 4 per cent, while spreads have increased by about 2 percentage points, roughly doubling overall interest costs.

“Today people are relatively complacent,” said Peter Stavros, co-head of KKR’s private equity business, who called rising debt costs “dramatic” and warned: “If it were to stay like this for years, we have a problem.”

Senior loans in recent financing packages have contained payment-in-kind options, noted the veteran dealmaker, who said those features normally were reserved for junior debt and reveal the burden of higher debt costs. “I have never seen it in my career,” said Stavros. “It is certainly not sustainable.”

“We had kind of a 12-year party in the financial world and private equity. It was a lot of fun and very lucrative and made us all look smarter than we are,” said Jonathan Sokoloff [Los Angeles], managing partner of Leonard Green. “The party is over” he said.

Milken’s cameo at the Jefferies dinner hinted at an emerging arbitrage as private equity firms buy back distressed-priced debts in companies they own.

But the billionaire who brought leveraged finance to the mainstream expects bigger stories to emerge. “You are going to have a lot of opportunities in the debt markets in the next year. That is for sure,” Milken told DD’s Antoine Gara after wrapping up his conference.

Berkshire investors warm up to the new guy It’s the nightmare for more than one Berkshire Hathaway shareholder: waking to the headline “Buffett Kicks Bucket”. Fears over how long the 92-year-old will be at Berkshire’s helm have stalked investors for years. But at this year’s annual meeting in Omaha shareholders got their best view yet of the man whom Warren Buffett regards as the answer to the succession question: 60-year-old Greg Abel.

Greg Abel takes selfie with Berkshire investors Greg Abel takes selfie with Berkshire investors © Bloomberg Abel appeared more confident in his answers to shareholder questions than last year, if lacking the folksy charm that has long defined Buffett’s style. He was grilled on the performance of rail operator BNSF, which suffered a derailment in March, and spoke knowledgeably about a separate incident after the railroad was found to have trespassed on tribal land for nearly a decade. Abel said shareholder criticisms were valid.

The forthright response may sit well with the company’s shareholders, who each year are reminded of Buffett’s 1991 congressional testimony over Salomon Brothers’ bond trading scandal. “Lose money for the firm and I will be understanding, lose a shred of reputation for the firm and I will be ruthless,” Buffett famously said.

How Abel is perceived is critical, not least because Berkshire’s reputation — hand-in-hand with Buffett’s — has helped get the company a first look at deals and convinced potential targets that they would be better managed under Berkshire than rival bidders. Some analysts have also argued the halo has offered Berkshire leeway to disclose less financial information about its divisions or engage less willingly with its shareholders than the typical publicly traded company. Getting more time with the media-averse executive is top of mind for other shareholders, given much of Buffett’s approach to investment has already been laid out in letters and his speeches over the past six decades. Investors want to see how Abel has absorbed it.

For Berkshire investors able to read through the company’s latest results — a long, financially-dense report put out just two hours before the meeting began — there were a handful of nuggets. Berkshire remained a net-seller of stock, cutting its stake in oil major Chevron, among others.

Instead, it bought back Berkshire shares and watched its cash pile grow to $131bn. The company is earning more than $1bn a quarter on that cash — potentially $5bn this year — a sum its chief executive noted would offset earnings declines at the majority of its businesses this year. Job moves Jefferies is hiring David Dolezal, Kyle Baker and Jeff Tang from Guggenheim Securities to boost its energy transition team, Reuters reported. BDA Partners has hired Dominik Woessner as head of private capital advisory secondaries in Singapore. He previously worked at Lazard and Greenhill.

https://www.ft.com/content/4fab0e76-5497-48b3-8938-cb792f4ee4db