Rise to fame
Michael Milken entered the world of finance in 1969 as a bond researcher and trader. When he started, he mostly worked with investment-grade fixed income. Around 1973, he convinced his then-boss to let him start a high-yield bond trading division which would buy and sell junk bonds. Junk bonds, not popular at the time, are risky since they have a higher chance of default than higher-rated bonds. Milken still made a 100% return on his investment that year.
After that success, Milken and his firm, Drexel Burnham Lambert, began underwriting junk bonds, propelling them to a more mainstream existence.
Soon, Milken was helping a number of business and entrepreneurs, including Steve Wynn, Ted Turner and Rupert Murdoch, raise money for their companies.
By the end of the 1980s, the junk bond market was worth $150bn and Milken, nicknamed the Junk Bond King, was a billionaire.
Milken’s stunning downfall began in 1986, when stock speculator Ivan Boesky pleaded guilty to insider trading and implicated Milken in a number of illegal activities, including insider trading, stock manipulation and fraud.
In 1989, a federal grand jury indicted Milken on 98 counts of racketeering and fraud. He pled guilty to six charges related to tax evasion and securities fraud and was hit with a $600m fine, a 10-year prison term and was banned from the securities industry for life.
Milken was released from prison after serving 22 months. He was diagnosed with cancer soon after and given 12-to-18 months to live.
It was after he beat the disease that he found his next calling life: philanthropy.
In the last two decades, Milken has raised millions for cancer research and launched several charitable organisations, such as FasterCures, a think tank that searches for ways to improve the medical system.
Milken is also the chairman of Knowledge Universe, a global education company that owns and operates schools around the world. His most well-known organisation is the Milken Institute, a non-profit think tank that conducts research around health care, job creation, technology and the economy.
Milken did apologise in court in 1990. “What I did violated not just the law but all of my principles and values,” he said. “I deeply regret it, and will for the rest of my life. I am truly sorry."
The return, explained
Milken was able to go from crook to good guy because it’s clear that he’s repented for his past, said Henry. His courtroom apology helped, but his years of philanthropy have proven to people that he’s a changed man.
He has set about making other people’s lives better, and it’s hard to find fault in that, Henry said.
“He’s owned up to his mistakes,” Henry said.
“There is some evidence of genuine remorse on his part,” added Arnold. “He’s made some terrible mistakes, he paid an enormous personal price, he went to jail and he lost his reputation. Now he’s devoting his life to being more useful. People are willing to give others a second chance if someone shows true remorse.”