Michael Milken Made Over a Billion Dollars in Four Years and Then Pleaded Guilty

Michael Milken built the high-yield bond desk at Drexel Burnham Lambert in the 1970s and ran it from his own office in Beverly Hills, where he opened the trading day at 4:30 a.m. local time to match New York's bell. He was the principal market-maker for what Wall Street called junk bonds — debt issued by below-investment-grade companies, often used to finance the leveraged buyouts that defined 1980s corporate America. From 1983 to 1987 his compensation from Drexel exceeded $1 billion, an income record at the time and an obvious red flag.

In March 1989 a federal grand jury in Manhattan indicted Milken on 98 counts including racketeering, securities fraud, and tax violations. Prosecutors sought $1.845 billion in forfeitures. Milken pleaded guilty to six lesser counts on April 24, 1990, was sentenced to ten years, and served 22 months at the federal facility in Pleasanton, California. He paid roughly $600 million in fines and disgorgement and was permanently barred from the securities industry. Drexel filed for bankruptcy two months before his guilty plea.

What happened after is the part most retrospectives leave out. Milken founded the Prostate Cancer Foundation after his own 1993 diagnosis, co-founded the Milken Institute, and resurfaced as one of America's most networked private investors. By 2022 his net worth was around $6 billion. On February 18, 2020, President Trump granted him a full pardon, citing the philanthropy. The trading license is still gone.