Michael Robert Milken (born 1946)

Michael Robert Milken (born 1946)


https://en.wikipedia.org/wiki/Michael_Milken https://drive.google.com/file/d/1l6GaKAksg3d2J8vz7cHFOX2QvbW62oEd/view?usp=sharing

Michael Milken

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Michael Milken

Milken in 2014


Michael Robert Milken

July 4, 1946 (age 74)

Encino, California, U.S.


United States


University of California, Berkeley (BS)

University of Pennsylvania (MBA)


Businessman, financier, philanthropist

Known for

Developing the High-yield bond market, Indictment for securities fraud, philanthropy

Net worth

US$3.7 billion

(March 2020)[1]

Criminal status


Pardoned (February 18, 2020)[2]


Lori Anne Hackel (m. 1968)




Lowell Milken (brother)


Securities and reporting violations (1989)

Criminal charge

Racketeering, securities fraud, etc.


22 months imprisonment (actual time served)

$600 million fine



Michael Robert Milken (born July 4, 1946) is an American convicted felon, financier and philanthropist. He is noted for his role in the development of the market for high-yield bonds ("junk bonds"),[3] and his conviction and sentence following a guilty plea on felony charges for violating U.S. securities laws.[4] Since his release from prison, he has also become known for his charitable giving.[5][6][7] Milken was pardoned by President Donald Trump on February 18, 2020.

Milken was indicted for racketeering and securities fraud in 1989 in an insider trading investigation. As the result of a plea bargain, he pleaded guilty to securities and reporting violations but not to racketeering or insider trading. Milken was sentenced to ten years in prison, fined $600 million, and permanently barred from the securities industry by the Securities and Exchange Commission. His sentence was later reduced to two years for cooperating with testimony against his former colleagues and for good behavior.[8] Since his release from prison, Milken has funded medical research.[9]

He is co-founder of the Milken Family Foundation, chairman of the Milken Institute, and founder of medical philanthropies funding research into melanoma, cancer and other life-threatening diseases. A prostate cancer survivor, Milken has devoted significant resources to research on the disease.[10] In a November 2004 cover article, Fortune magazine called him "The Man Who Changed Medicine" for changes in approach to funding and results that he initiated.[9] Milken's compensation while head of the high-yield bond department at Drexel Burnham Lambert in the late 1980s exceeded $1 billion over a four-year period, a record for U.S. income at that time.[11] With an estimated net worth of around $3.7 billion as of 2018, he is ranked by Forbes magazine as the 606th richest person in the world.[1][12]



Milken was born into a middle-class Jewish[13][14] family in Encino, California.[15]

He graduated from Birmingham High School where he was the head cheerleader and worked while in school at a diner.[16] His classmates included future Disney president Michael Ovitz[17] and actresses Sally Field and Cindy Williams. In 1968, he graduated from the University of California, Berkeley with a B.S. with highest honors where he was elected to Phi Beta Kappa and was a member of the Sigma Alpha Mu fraternity.[18] He received his MBA from the Wharton School of the University of Pennsylvania. While at Berkeley, Milken was influenced by credit studies authored by W. Braddock Hickman, a former president of the Federal Reserve Bank of Cleveland, who noted that a portfolio of non-investment grade bonds offered "risk-adjusted" returns greater than that of an investment-grade portfolio.


Through his Wharton professors, Milken landed a summer job at Drexel Harriman Ripley, an old-line investment bank, in 1969. After completing his MBA, he joined Drexel (by then known as Drexel Firestone) as director of low-grade bond research. He was also given control of some capital and permitted to trade. Over the next 17 years, he had only four down months.[12]

Drexel merged with Burnham and Company in 1973 to form Drexel Burnham. Despite the firm's name, Burnham was the nominal survivor; the Drexel name came first only at the insistence of the more powerful investment banks, whose blessing was necessary for the merged firm to inherit Drexel's position as a "major" firm.

Milken was one of the few prominent holdovers from the Drexel side of the merger, and became the merged firm's head of convertibles. He persuaded his new boss, fellow Wharton alumnus Tubby Burnham, to let him start a high-yield bond trading department—an operation that soon earned a 100 percent return on investment.[12] By 1976, Milken's income at what was now Drexel Burnham Lambert was estimated at $5 million a year. In 1978, Milken moved the high-yield bond operation to Century City in Los Angeles.[19][20][21]

High-yield bonds and leveraged buyouts[edit]

History of private equity

and venture capital

Early history

(origins of modern private equity)

The 1980s

(leveraged buyout boom)

The 1990s

(leveraged buyout and the venture capital bubble)

The 2000s

(dot-com bubble to the credit crunch)

See also: Private equity in the 1980s

By the mid-1980s, Milken's network of high-yield bond buyers (notably Fred Carr's Executive Life Insurance Company and Tom Spiegel's Columbia Savings & Loan) had reached a size that enabled him to raise large amounts of money quickly.

This money-raising ability also facilitated the activities of leveraged buyout (LBO) firms such as Kohlberg Kravis Roberts and of the so-called "greenmailers". Most of them were armed with a "highly confident letter" from Drexel, a tool Drexel's corporate finance wing crafted that promised to raise the necessary debt in time to fulfill the buyer's obligations. It carried no legal status, but by this time, Milken had a reputation for being able to make markets for any bonds that he underwrote. For this reason, "highly confident letters" were considered to reliably demonstrate capacity to pay.[22][23] Supporters, like George Gilder in his book, Telecosm (2000), state that Milken was "a key source of the organizational changes that have impelled economic growth over the last twenty years. Most striking was the productivity surge in capital, as Milken ... and others took the vast sums trapped in old-line businesses and put them back into the markets."[24]

Amongst his significant detractors have been Martin Fridson formerly of Merrill Lynch and author Ben Stein. Milken's high-yield "pioneer" status has proved dubious as studies show "original issue" high-yield issues were common during and after the Great Depression. Milken himself points out that high-yield bonds go back hundreds of years, having been issued by the Massachusetts Bay Colony in the 17th century and by America's first Treasury Secretary Alexander Hamilton. Others such as Stanford Phelps, an early co-associate and rival at Drexel, have also contested his credit as having pioneered the modern high-yield market.[citation needed]

Despite his influence in the financial world during the 1980s (at least one source called him the most powerful American financier since J. P. Morgan),[25] Milken was an intensely private man who shunned publicity; he reportedly owned almost all photographs taken of him.[12][17]

Later career[edit]

Milken and his brother Lowell founded Knowledge Universe in 1996, as well as Knowledge Learning Corporation (KLC), the parent company of KinderCare Learning Centers, the largest for-profit child care provider in the country. Michael Milken used to be chairman of Knowledge Universe, until it was sold in 2015.[26][27]

He established K12 Inc., a publicly traded education management organization (EMO) that provides online schooling, including to charter school students, for whom services are paid by tax dollars,[28] which is the largest EMO in terms of enrollment.[29]

Milken in 2018


Dan Stone, a former Drexel executive, wrote in his book April Fools that Milken was under nearly constant scrutiny from the Securities and Exchange Commission from 1979 onward due to unethical and sometimes illegal behavior in the high-yield department.[25]

Milken's role in such behavior has been much debated. Stone claims that Milken viewed the securities laws, rules and regulations with a degree of contempt, feeling they hindered the free flow of trade. However, Stone said that while Milken condoned questionable and illegal acts by his colleagues, Milken himself personally followed the rules.[25] He often called Drexel's president and CEO, Fred Joseph—known for his strict view of the securities laws—with ethical questions.[12]

On the other hand, several of the sources James B. Stewart used for Den of Thieves told him that Milken often tried to get as much as five times the maximum markup on trades than was permitted at the time.[30]

Harvey A. Silverglate, a prominent defense attorney who represented Milken during the appellate process, disputes that view in his book Three Felonies a Day: "Milken's biggest problem was that some of his most ingenious but entirely lawful maneuvers were viewed, by those who initially did not understand them, as felonious, precisely because they were novel – and often extremely profitable."[31]

Ivan Boesky and an intensifying investigation[edit]

The SEC inquiries never got beyond the investigation phase until 1986, when arbitrageur Ivan Boesky pleaded guilty to securities fraud as part of a larger insider trading investigation. As part of his plea, Boesky implicated Milken in several illegal transactions, including insider trading, stock manipulation, fraud and stock parking (buying stocks for the benefit of another). This led to an SEC probe of Drexel, as well as a separate criminal probe by Rudy Giuliani, then United States Attorney for the Southern District of New York. Although both investigations were almost entirely focused on Milken's department, Milken refused to talk with Drexel (which launched its own internal investigation) except through his lawyers.[12][25] It turned out that Milken's legal team believed Drexel would be forced to cooperate with the government at some point, believing that a securities firm would not survive the bad publicity of a long criminal and SEC probe.[30]

For two years, Drexel insisted that nothing illegal occurred, even when the SEC sued Drexel in 1988. Later that year, Giuliani began considering an indictment of Drexel under the powerful Racketeer Influenced and Corrupt Organizations Act. Drexel management immediately began plea bargain talks, concluding that a financial institution could not possibly survive a RICO indictment. However, talks collapsed on December 19, when Giuliani made several demands that Drexel found too harsh, including one that Milken leave the firm if indicted.[25]

Only a day later, however, Drexel lawyers discovered suspicious activity in one of the limited partnerships Milken set up to allow members of his department to make their own investments. That entity, MacPherson Partners, had acquired several warrants for the stock of Storer Broadcasting in 1985. At the time, Kohlberg Kravis Roberts was in the midst of a leveraged buyout of Storer, and Drexel was lead underwriter for the bonds being issued. One of Drexel's other clients bought several Storer warrants and sold them back to the high-yield bond department. The department in turn sold them to MacPherson. This partnership included Milken, other Drexel executives, and a few Drexel customers. However, it also included several managers of money market funds who had worked with Milken in the past. It appeared that the money managers bought the warrants for themselves and did not offer the same opportunity to the funds they managed.[25] Some of Milken's children also received warrants, according to Stewart, raising the appearance of Milken self-dealing.[30]

However, the warrants to money managers were especially problematic. At the very least, Milken's actions were a serious breach of Drexel's internal regulations, and the money managers had breached their fiduciary duty to their clients. At worst, the warrants could have been construed as bribes to the money managers to influence decisions they made for their funds.[30]

Indeed, several money managers were eventually convicted on bribery charges.[32] The discovery of MacPherson Partners—whose very existence had not been known to the public at the time—seriously eroded Milken's credibility with the board. On December 21, 1988, Drexel entered a guilty plea to six counts of stock parking and stock manipulation. Drexel said it "was not in a position to dispute" the allegations made by the government. As part of the deal, Drexel agreed that Milken had to leave the firm if indicted.[12][25]

Indictment and sentencing[edit]

In March 1989, a federal grand jury indicted Milken on 98 counts of racketeering and fraud. The indictment accused Milken of a litany of misconduct, including insider trading, stock parking (concealing the real owner of a stock), tax evasion and numerous instances of repayment of illicit profits. One charge was that Boesky paid Drexel $5.3 million in 1986 for Milken's share of profits from illegal trading. This payment was represented as a consulting fee to Drexel. Shortly afterward, Milken resigned from Drexel and formed his own firm, International Capital Access Group.[12][25]

On April 24, 1990, Milken pleaded guilty to six counts of securities and tax violations.[1] Three of them involved dealings with Boesky to conceal the real owner of a stock:[31]

  • Aiding and abetting another person's failure to file an accurate 13d statement with the SEC, since the schedule was not amended to reflect an understanding that any loss would be made up

  • Sending confirmation slips through the mail that failed to disclose that a commission was included in the price

  • Aiding and abetting another in filing inaccurate broker-dealer reports with the SEC

Two other counts were related to tax evasion in transactions Milken carried out for a client of the firm, David Solomon, a fund manager[31]

  • Selling stock without disclosure of an understanding that the purchaser would not lose money

  • Agreeing to sell securities to a customer and to buy those securities back at a real loss to the customer, but with an understanding that he would try to find a future profitable transaction to make up for any losses

The last count was for conspiracy to commit these five violations.

As part of his plea, Milken agreed to pay $200 million in fines. At the same time, he agreed to a settlement with the SEC in which he paid $400 million to investors who had been hurt by his actions. He also accepted a lifetime ban from any involvement in the securities industry. In a related civil lawsuit against Drexel he agreed to pay $500 million to Drexel's investors.[33][34]

Critics of the government charge that the government indicted Milken's brother Lowell to pressure Milken to settle, a tactic some legal scholars condemn as unethical. "I am troubled by - and other scholars are troubled by - the notion of putting relatives on the bargaining table," said Vivian Berger, a professor at Columbia University Law School, in a 1990 interview with The New York Times.[35] As part of the deal, the case against Lowell was dropped. Federal investigators also questioned some of Milken's relatives about their investments.[12]

At Milken's sentencing, Judge Kimba Wood told him:

You were willing to commit only crimes that were unlikely to be detected. ... When a man of your power in the financial world ... repeatedly conspires to violate, and violates, securities and tax business in order to achieve more power and wealth for himself ... a significant prison term is required.[30]

In statements to a parole board in 1991, Judge Wood estimated that the "total loss from Milken's crimes" was $318,000, less than the government's estimate of $4.7 million and she recommended that he be eligible for parole in three years.[36] Milken's sentence was later reduced to two years from ten; he served 22 months.[37][38]

Attempts to secure presidential pardon[edit]

In June 2018 it was reported that some of president Donald Trump's advisers, including Rudy Giuliani, the onetime federal prosecutor whose criminal investigation led to Milken's conviction, were urging the president to pardon Milken. Milken's attempts to secure a presidential pardon have spanned multiple administrations.[39]

On February 18, 2020, Trump granted clemency to Milken.[40][41] However, his previous trading license which he lost following his conviction still remained void, and he would still have to reapply and obtain a new trading license in order to return to trading securities.[42]

2013 SEC investigation[edit]

In February 2013, the SEC announced that they were investigating whether Milken violated his lifetime ban from the securities industry. The investigation revolved around Milken allegedly providing investment advice through Guggenheim Partners.[43]

Since 2011, the SEC has been investigating Guggenheim's relationship with Milken.[44]


Milken lecturing on "PayPal and the poor", 2019

Upon his release from prison in 1993, Milken founded the Prostate Cancer Foundation for prostate cancer research, which by 2010 was "the largest philanthropic source of funds for research into prostate cancer".[45] Milken himself was diagnosed with advanced prostate cancer in the same month he was released.[46] His cancer is currently in remission. The Prostate Cancer Foundation works closely with Major League Baseball through its Home Run Challenge program to promote awareness of prostate cancer and raise money for medical research. Each season in the weeks leading up to Father's Day, Milken visits many ballparks and appears on TV and radio broadcasts during the games.

In 2003, Milken launched a Washington, D.C.-based think tank called FasterCures, which seeks greater efficiency in researching all serious diseases. Key initiatives of FasterCures are TRAIN, Partnering for Cures and the Philanthropy Advisory Service.[46]

Fortune magazine called Milken "The Man Who Changed Medicine" in a 2004 cover story on his philanthropy.[9]

In September 2012, Milken and the director of the National Institutes of Health, Dr. Francis Collins, jointly hosted 1,000 senior medical scientists, patients, activists, philanthropists, regulators, and members of Congress at a three-day conference[47] to demonstrate the return on investment in medical research.

On March 11, 2014, President Steven Knapp of George Washington University in Washington, D.C. announced the university was renaming its public health school after Milken as a result of a total of $80 million in gifts, $50 million from the Milken Institute and the Milken Family Foundation and $30 million gift from Viacom chairman Sumner Redstone. These gifts are designated to research and scholarship on public health issues.[48]

In popular culture[edit]

Milken became the first recipient of the Ig Nobel Economics Prize in 1991.[49][50][51]

Ayad Akhtar's play, Junk, set during the bond trading scandals of the 1980s, is partly based on Milken's "fall from grace". Milken is the inspiration for the main character in the play.[52]

Personal life[edit]

Milken is married to Lori Anne Hackel, whom he had dated in high school.[53] They have three children.[54] He reportedly follows a vegetarian-like diet rich in fruits and vegetables for its presumed health benefits and has co-authored a vegan cookbook with Beth Ginsberg.[55][56]

2019 (Oct 26) - NY Times : "Symbol of ’80s Greed Stands to Profit From Trump Tax Break for Poor Areas"

By Eric Lipton and Jesse Drucker

Published Oct. 26, 2019

Updated Feb. 19, 2020


2020-02-19-nytimes-symbol-of-80s-greed-profit-trump-tax-break-poor-areas https://drive.google.com/file/d/1BU2lX4E9qc6yhdApHf_wNsMaZ26c9zby/view?usp=sharing

2020-02-19-nytimes-symbol-of-80s-greed-profit-trump-tax-break-poor-areas-txt.txt https://drive.google.com/file/d/14WwsC2Wj3MpnfCXq7nYI3HHc2ULZVacL/view?usp=sharing

RENO, Nev. — In the 1980s, Michael Milken embodied Wall Street greed. A swashbuckling financier, he was charged with playing a central role in a vast insider-trading scheme and was sent to prison for violating federal securities and tax laws. He was an inspiration for the Gordon Gekko character in the film “Wall Street.”

Mr. Milken has spent the intervening decades trying to rehabilitate his reputation through an influential nonprofit think tank, the Milken Institute, devoted to initiatives “that advance prosperity.”

These days, the Milken Institute is a leading proponent of a new federal tax break that was intended to coax wealthy investors to plow money into distressed communities known as “opportunity zones.” The institute’s leaders have helped push senior officials in the Trump administration to make the tax incentive more generous, even though it is under fire for being slanted toward the wealthy.

Mr. Milken, it turns out, is in a position to personally gain from some of the changes that his institute has urged the Trump administration to enact. In one case, the Treasury secretary, Steven Mnuchin, directly intervened in a way that benefited Mr. Milken, his longtime friend.

It is a vivid illustration of the power that Mr. Milken, who was barred from the securities industry and fined $600 million as part of his 1990 felony conviction, has amassed in President Trump’s Washington. In addition to the favorable tax-policy changes, some of Mr. Trump’s closest advisers — including Mr. Mnuchin, Jared Kushner and Rudolph W. Giuliani — have lobbied the president to pardon Mr. Milken for his crimes, or supported that effort, according to people familiar with the effort.

While the Milken Institute’s advocacy of opportunity zones is public, Mr. Milken’s financial stake in the outcome is not.

The former “junk bond king” has investments in at least two major real estate projects inside federally designated opportunity zones in Nevada, near Mr. Milken’s Lake Tahoe vacation home, according to public records reviewed by The New York Times.

One of those developments, inside an industrial park, is a nearly 700-acre site in which Mr. Milken is a major investor. Last year, after pressure from Mr. Milken’s business partner and other landowners, the Treasury Department ignored its own guidelines on how to select opportunity zones and made the area eligible for the tax break, according to people involved in the discussions and records reviewed by The Times.

The unusual decision was made at the personal instruction of Mr. Mnuchin, according to internal Treasury Department emails. It came shortly after he had spent time with Mr. Milken at an event his institute hosted.

“People were troubled,” said Annie Donovan, who previously ran the Treasury office in charge of designating areas as opportunity zones. She and two of her former colleagues said they were upset that the Treasury secretary was intervening to bend rules, though they said they didn’t realize at the time that Mr. Mnuchin’s friend stood to profit. The agency’s employees, Ms. Donovan said, “were put in a position where they had to compromise the integrity of the process.”

The opportunity zone initiative, tucked into the tax cut bill that Mr. Trump signed into law in 2017, has become one of the White House’s signature initiatives. It allows investors to delay or avoid taxes on capital gains by putting money in projects or companies in more than 8,700 federally designated opportunity zones. Mr. Trump has boasted that it will revitalize downtrodden neighborhoods.

But the incentive, also championed by some prominent Democrats, has been dogged by criticism that it is a gift to wealthy investors and real estate developers. From the start, the tax break targeted people with capital gains, the vast majority of which are held by the very richest investors. The Treasury permitted opportunity zones to encompass not only poor communities but some adjacent affluent neighborhoods. Much of the money so far has flowed to those wealthier areas, including many projects that were planned long before the new law was enacted.

Investors and others — including Mr. Milken’s institute — have been pushing the Treasury Department to write the rules governing opportunity zones in ways that would make it easier to qualify for the tax break. That campaign worked, and Mr. Milken is among the potential beneficiaries.

Geoffrey Moore, a spokesman for Mr. Milken, confirmed that Mr. Milken had investments inside opportunity zones, though they are a sliver of his overall real estate holdings. He disputed that Mr. Milken had used his institute or Washington connections to benefit his investments and said no one at the institute “has any specific knowledge of Mike’s personal investments.”

Mr. Moore added that Mr. Milken’s support for opportunity zones was based on his longstanding belief “that jobs and the democratization of ownership are the keys to helping people in economically struggling areas.”

A spokesman for the Milken Institute, Geoffrey Baum, said that “to suggest that the work of the Milken Institute is motivated by or connected to Mr. Milken’s investments is flat-out wrong.” He said the institute advocated changes that were intended to spread the benefits to more low-income communities, not to help the wealthy.

The White House declined to comment on whether Mr. Trump is considering a presidential pardon for Mr. Milken.

A Notorious Symbol

ImageMr. Milken at the New York offices of Drexel Burnham Lambert in 1978.

Mr. Milken at the New York offices of Drexel Burnham Lambert in 1978.Credit...Neal Boenzi/The New York Times

Mr. Milken — operating from an X-shaped trading desk in Beverly Hills, Calif. — was a Wall Street legend. He pioneered the junk bond, which enabled financially risky companies to borrow billions of dollars and ignited a wave of often-hostile corporate takeovers that came to define a go-go era. His firm, Drexel Burnham Lambert, hosted an annual event, which came to be known as the Predators’ Ball, where the era’s greatest financiers mingled. Mr. Milken became a billionaire.

Then, in 1989, federal prosecutors charged him with violating securities and tax laws and with being part of a lucrative insider-trading ring. The next year, Drexel Burnham went bankrupt.

Mr. Milken pleaded guilty and was sentenced to 10 years in prison and paid $600 million in fines. After cooperating with the government, he ended up serving about two years behind bars.

Mr. Milken emerged with a considerable fortune intact. He invested in companies in for-profit education, health care and fast food, according to securities filings and company announcements. He also acquired lots of real estate, coming to own roughly 700 properties around the United States, Mr. Moore said.


Mr. Milken after a presentencing hearing in 1990.Credit...Mark Lennihan/Associated Press

He continued to attract scrutiny from regulators, including one case in which Mr. Milken paid $47 million to resolve the Securities and Exchange Commission’s allegations that he had violated his lifetime ban from the securities industry.

Mr. Milken, however, has largely managed to restore his reputation — and his clout. His family gave tens of millions of dollars to his Milken Institute, which he founded in 1991 and whose board of directors he leads. After battling prostate cancer, he helped raise hundreds of millions of dollars to fund cancer research.

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In Washington, Mr. Milken, 73, and his institute have courted influence, wooing and sometimes adding former federal officials. His family recently spent more than $85 million to buy three buildings opposite the White House and the Treasury Department, which he is transforming into his institute’s new Washington offices.

The most public display of his renewed stature comes each spring in Los Angeles when Mr. Milken presides over a glitzy gathering at the Beverly Hilton — the same venue where his famed Predators’ Balls took place three decades ago.

The Milken Institute’s annual conference attracts thousands of the world’s most powerful people — from government, finance, medicine, Hollywood and the like — for a frenzy of high-powered networking and conspicuous consumption. Recent guests have included Leon Black, the chairman of Apollo Global Management; David M. Solomon, the chief executive of Goldman Sachs; Eric Schmidt, the former chief executive of Google; and the New England Patriots quarterback Tom Brady.

Mr. Milken is the power broker at the center of the action. Onstage, he interviews famous guests. In private, he organizes exclusive dinners. Some have called the event the Davos of North America.

In the Trump era, cabinet secretaries and White House advisers have been among the event’s marquee guests, more so than in other recent administrations. Coveted speaking roles have gone to Ivanka Trump and her husband, Mr. Kushner, giving them access to an elite audience.

Shaping the Rules of the Road


Treasury Secretary Steve Mnuchin arriving for the Milken Institute Global Conference last year. He is a longtime friend of Mr. Milken.Credit...Jae C. Hong/Associated Press

At last year’s event in Beverly Hills, attendees included Commerce Secretary Wilbur Ross and Mr. Mnuchin. The Treasury secretary was accompanied by several senior aides, including Daniel Kowalski, who is overseeing the department’s drafting of the opportunity zone rules.

Mr. Kowalski, who has spent months drumming up support across the country for opportunity zones, is well acquainted with the Milken Institute.

After the tax incentive became law, it was up to the Treasury, and Mr. Kowalski in particular, to put it in effect through a series of rules. Officials at the Milken Institute met repeatedly with him to try to influence that rule-writing process. The institute submitted a series of letters and presentations to the Treasury and the Internal Revenue Service, and at times directly to Mr. Mnuchin, pushing for rules that would make the tax break easier to qualify for.

“Helping to shape the rules of the road” is how the Milken Institute describes its work on opportunity zones.

The institute “is incredibly active,” Mr. Kowalski said in an interview. He said he thought he had discussed opportunity zones with Mr. Milken, although he said he could not specifically recall. He disputed that Mr. Milken or his institute exerted any special influence over the Treasury Department.


Daniel Kowalski, third from left, a senior aide to Mr. Mnuchin, spoke at an opportunity-zones event in June. He oversaw the Treasury’s drafting of rules for the zones.Credit...Melissa Lyttle for The New York Times

Among the Milken Institute’s proposals was for the Treasury to give investors a generous amount of time to build on opportunity zone land and to reduce the amount that investors had to spend upgrading properties to be eligible for the tax break. Those changes would make it easier for investors to reap the benefits.

The institute also asked the Treasury a question that would clarify if investors who owned land in opportunity zones before the tax law was passed were eligible to receive the benefits. The Treasury ruled that such investments were permissible, a controversial decision since the purpose of the opportunity zone initiative was to spur new investments, not reward existing projects.

Mr. Milken’s spokesman, Mr. Moore, said Mr. Milken “never attended any meeting focused on opportunity zone regulations with any federal agency, nor did he consult with any institute representatives who may have interacted with any agency.”

But Aron Betru, who led the Milken Institute’s opportunity zone efforts, told The Times in an interview that he did discuss opportunity zones with Mr. Milken, though he said he was not aware of Mr. Milken’s specific investments. And in 2018 Mr. Mnuchin and Mr. Milken attended a small, private event, sponsored by the institute, to discuss opportunity zones.



<div><span>Mr. Milken is an investor in 700 acres in an industrial park in Nevada. The park didn’t qualify for opportunity zone status until Mr. Mnuchin told Treasury officials that they should accept the nomination of the census tract it is in.</span></div>

Mr. Milken is an investor in 700 acres in an industrial park in Nevada. The park didn’t qualify for opportunity zone status until Mr. Mnuchin told Treasury officials that they should accept the nomination of the census tract it is in.

Credit...Tiffany Brown Anderson for The New York Times

High above Reno, on a vast hillside where wild horses roam, is the site of one of Nevada’s biggest opportunity zones.

The center of this area is known as Comstock Meadows, a reference to the 1859 discovery of the so-called Comstock Lode, one of the largest deposits of silver ever found in the United States. The find generated hundreds of millions of dollars in wealth, creating a boomtown in nearby Virginia City.

Today it is home to the Tahoe-Reno Industrial Center. Lured by cheap land, Google is building a huge new complex inside the industrial park. Tesla and Switch, the data-center company, recently opened their own operations. And down the street, Mr. Milken co-owns a company that holds nearly 700 acres of empty land.

He and his partner — Chip Bowlby, president of a development company called Reno Land — planned to use that space to open a so-called tech incubator, where smaller companies could set up operations, among other possible uses.

Being inside an opportunity zone would potentially be a huge boon for the venture. It would mean that start-ups at the tech incubator could attract tax-advantaged money from outside investors.

Nevada officials wanted to nominate the census tract that included the industrial park as an opportunity zone. But in early 2018, Treasury officials had ruled that the area was ineligible because its residents were too affluent.

Major landowners at the site, including Mr. Bowlby, urged state and local officials to try to get the Treasury to reverse that ruling, said Kris Thompson, the project manager at the industrial center.

Storey County, where the industrial park is situated, deployed Jon Porter, a former House Republican from Nevada who is now a lobbyist, to push the matter. Dean Heller, at the time a Republican senator, and Brian Sandoval, then the governor, also were enlisted and had phone calls with Mr. Mnuchin around that time, according to Treasury records. Mr. Heller, Mr. Porter and Mr. Sandoval did not respond to requests for comment.

‘My L.A. Friends’


Mr. Milken at the Milken Institute Global Conference in April this year.

Mr. Milken at the Milken Institute Global Conference in April this year.Credit...Michael Kovac/Getty Images

Just as that lobbying intensified in the spring of 2018, Mr. Milken opened his institute’s annual conference in Beverly Hills.

Mr. Mnuchin was a featured guest. “It’s great to be here with you and all my L.A. friends,” the Treasury secretary said in an onstage interview on April 30.

That afternoon, the institute organized an invitation-only meeting with Mr. Mnuchin and his staff to discuss opportunity zones. Other listed attendees included Sean Parker, the former Facebook president and an early advocate of opportunity zones, and Raymond J. McGuire, a top Citigroup executive. Mr. Betru was the moderator.

Within days, the Treasury Department had shifted its position and was now willing to let the state nominate the area around the Nevada industrial park as an opportunity zone.

Mr. Mnuchin told Mr. Kowalski to inform other Treasury officials that they should accept Storey County’s nomination, according to email records reviewed by The Times.


Mr. Mnuchin and his wife, Louise Linton, with Mr. Milken last year.Credit...Sean Zanni/Patrick McMullan, via Getty Images

Mr. Mnuchin spoke on the phone on May 8 with Mr. Sandoval. Forty-five minutes later, Mr. Sandoval formally nominated the site to be part of an opportunity zone, email records, including documents from Nevada, show. And the decision was soon officially blessed by the Treasury Department. (While the Treasury’s reversal has been reported, Mr. Milken’s connection has not been previously disclosed.)

Treasury officials said the change was part of an effort to iron out inconsistencies in different Treasury rules. But the switch provoked intense protests from Treasury and I.R.S. employees.

“Failure to apply the designation standards equally across the board will call into question the legitimacy of the process by which the designations were made,” an unnamed I.R.S. employee wrote in an internal memo in May 2018. It added that the appearance of “arbitrary” Treasury standards risked “opening the door for accusations that the determination process was influenced by political considerations or bias.”

“Any such controversy would in turn taint the opportunity zones and potentially chill or cloud the incentive for investors to invest in the opportunity zones,” the memo said.

In an interview this month at an event co-sponsored by the Milken Institute in Jackson, Miss., Mr. Kowalski would not comment on whether Mr. Mnuchin had been the driving force behind the Treasury’s reversal. “I can certainly say he was apprised of the situation,” Mr. Kowalski said.

Brett Theodos, a senior fellow at the Urban Institute, which has advised state governments including Nevada on their nominations of opportunity zones, said the Treasury’s decision-making appeared problematic. “Making exceptions for the politically connected is deeply troubling,” he said.

Spokesmen for Mr. Milken and Mr. Mnuchin said the two men had never discussed the Storey County issue. Mr. Mnuchin’s spokesman, Devin O’Malley, said Mr. Mnuchin “had no knowledge of Milken’s investments in Nevada.”

Wins for Milken


Mr. Milken is an investor in this housing, retail and hotel development being built in Reno. It’s in an opportunity zone.Credit...Tiffany Brown Anderson for The New York Times

In August 2018, Mr. Mnuchin and Mr. Milken met again. This time, the occasion was a small conference hosted by the Milken Institute to discuss opportunity zones. The event took place at the Hamptons home of the real estate developer Richard LeFrak, a friend of and donor to Mr. Trump, according to the event’s agenda.

A handout from the event, which was later posted online, showed a map of all 8,764 opportunity zones in the United States, but focused on the virtues of just one specific area: Reno. The handout promoted the city as a “hub to the western United States.”

The handout did not mention that Mr. Milken was a major investor in two projects in opportunity zones in that area: the tech incubator in the industrial park and a housing, hotel and retail development on the site of an old shopping mall in Reno.

As his institute was continuing to push the Treasury to tinker with its opportunity zone rules, Mr. Milken gave Mr. Mnuchin a flight in January on his private jet to Los Angeles, where both men have homes.

Three months later, the Treasury Department heeded the institute’s request and clarified that investors could receive the opportunity zone tax benefits by simply leasing properties to themselves. As a result, investors who had long owned land inside opportunity zones were now eligible for the tax break.

In a separate round of rule changes, Treasury agreed to loosen rules governing how quickly developers had to start work on opportunity zone projects and how much money they had to spend — both revisions that the Milken Institute, among many others, had sought.

This was a potential win for Mr. Milken. His partner, Mr. Bowlby, had bought the Nevada real estate — for both the tech incubator and the residential and retail complex — before the areas were designated as opportunity zones.

Mr. Bowlby, who didn’t respond to requests for comment, said at a public event this year that he was using a lease on his Reno project with Mr. Milken “so we can still be qualified for the opportunity zone.”

The Treasury’s leasing decision has faced criticism.

“Anybody who owned property in the zone prior to 2018 would have been out of luck until these rules,” said Michelle Layser, a tax law professor at the University of Illinois College of Law. “This really opens the door.”

Mr. Moore, the spokesman for Mr. Milken, denied that he received special treatment.

“Your insinuation that Mike has reaped personal financial benefits from Milken Institute programs is outrageous,” he said. “It’s clear that you are less interested in the objective truth than in assigning to Mike Milken sinister motives that simply do not exist.”

Mr. Moore said that Mr. Milken hadn’t hidden the fact that he had investments in the Nevada opportunity zones. He said Mr. Milken had described them at the Hamptons event that Mr. Mnuchin attended. “There was nothing secretive about it,” he said.

Mr. Kowalski said he hadn’t been aware that Mr. Milken was an investor in the Nevada projects at the same time that his institute was seeking to change the rules governing opportunity zones.

Was he surprised? Mr. Kowalski paused. “Nothing surprises me anymore,” he said.

2020 (Jan 30) - Wall Street Journal - OpEd from Michael Milken - "The New York Times builds a false narrative aimed at discrediting me and tax reform’s opportunity zones."


2020-01-30-wall-street-journal-milken-no-one-safe-from-biased-reporting-nytimes-is-false.pdf https://drive.google.com/file/d/1Lf9sJvPZ5mJoGOYeihbduz80BUsuGDvq/view?usp=sharing

No One Is Safe From Biased Reporting

By Michael Milken Jan. 30, 2020 6:56 pm ET

A free and independent press is, and should always be, an impenetrable bulwark of our democracy. “Were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter,” wrote Thomas Jefferson in a 1789 letter. The media’s hallowed role, embodied in the First Amendment, assures near-total freedom to report (and even misreport) the news.

Press freedom, however, implies a responsibility to place truth above narrow partisan campaigns. That’s why editorial and commentary pages must be kept separate from news reporting. That separation has often been breached, but certain prominent news organizations have branded themselves clarions of truth. The New York Times long nurtured such a reputation. So it is profoundly disappointing to see the Times’s news pages increasingly corrupted by the political views of its reporters and editorialists.

Candor requires that I note my own lack of objectivity. For complex reasons, I have been the object of unfounded and vicious attacks by the Times for more than three decades. An article in October falsely suggested that I had intervened to obtain opportunity-zone status for the 107,000-acre Tahoe-Reno Industrial Center, or TRIC, to benefit what the Times said was my minority investment in a partnership holding 688 acres of raw land in TRIC. (It’s my longstanding practice not to divulge what’s in my portfolio.) The singular focus on this tiny sliver of the 107,000 acres makes no sense. TRIC’s 99.4% owners include Tesla, Google, Panasonic, Walmart, Blockchains, Berkshire Hathaway, Switch and other giant companies that have spent billions of dollars at TRIC and have lobbied on its behalf.

I had no knowledge about the extensive activities of the major corporate owners, their lobbyists or advisers. I am not a manager, director or officer of the partnership that owns 688 acres. Yet the Times ignored the major corporate owners to focus on me, a clear indication of their intent to deceive their readers. I can take care of myself, but I’m concerned about all those other victims caught in the middle of partisan mudslinging by the institutions that claim dedication to the truth.

As Fred Smith, founder and CEO of FedEx, wrote in these pages in November, the Times attacked his company by “printing selected facts, connecting unrelated events, and implying nefarious activities when there were none whatever.” That’s exactly what the Times did to me last fall in a long article about Nevada real estate investments. Mr. Smith’s complaint centered on provisions of the 2017 Tax Cuts and Jobs Act and its benefits to FedEx that the Times asserted were unfair.

A different provision of the act established opportunity zones, which provide incentives for private capital to create jobs and assist families in economically depressed areas. It appears the Times doesn’t like the opportunity-zone concept. They and others might prefer direct government assistance rather than incentives to private capital. While reasonable people have taken principled positions on both sides of this debate, it’s a problem when a newspaper violates its mission by carrying editorial views over to the news pages.

This is part of the Times’s multiyear campaign opposing virtually every initiative of the Trump administration. The paper attacked Treasury Secretary Steven Mnuchin, whose department oversees opportunity zones. Then it determined it could conjure a news story virtually out of thin air if it could link Mr. Mnuchin in some way to a private citizen who might benefit from provisions of the Tax Cuts and Jobs Act.

Apparently I fit the bill, and the paper deployed six reporters and researchers for several months looking for dirt. They didn’t find any—I did none of the things they hinted at. But the editors weren’t about to let an absence of facts kill a breathless front-page exposé about how I and other investors stood to “Profit From Trump Tax Break for Poor Areas.” The Times claimed, wrongly, that the Treasury secretary directed regulatory changes for my benefit. Not only did he not make the changes for my benefit, the changes didn’t benefit me. The article reached false conclusions by claiming that mere coincidences proved intent, or by conflating events that occurred months apart in a dizzying feat of obfuscation. This ignored the public record of what really happened.

This is irresponsible journalism. The Times, which sometimes seems to exist in an alternate universe, knew before publication that important conclusions and implications in the article about me were wrong because we and the U.S. Treasury gave them every relevant fact. I’ve never spoken to Mr. Mnuchin, any other government official or anyone else about putting TRIC in an opportunity zone; I have never authorized anyone to act for me on that matter and no one has ever asked me to take any action related to it; I had no knowledge of any lobbying to put TRIC in an opportunity zone.

We gave the Times these and many other facts. They, and anyone with an internet connection, could have easily found the truth. I asked my lawyers to do just that by retaining someone to go online and figure out the real story from the public record. In three days this person found a deep trove of facts that the Times’s six reporters had apparently chosen to ignore. Anyone who wants to know the truth can find an article telling the real story plus a fact sheet and timeline at www.mikemilken.com. These documents provide a sobering antidote to the errors, omissions, deceptions and bias in the Times article.

The Times has now sent my office new questions that suggest another article is in the works. I will vigorously counter any further journalistic mendacity with hard facts and, where appropriate, other actions. But the greater risk is that no one is safe when a previously respected news organization deploys its considerable resources to twist the truth. Keep that in mind as you read future articles attacking opportunities for upward mobility through job creation.

Mr. Milken is chairman of the Milken Institute.