The Exchanges

Q Drexel, I mean, the high yield bond market was about seventy billion in the 19 seventies. I think it was 700,000,000,010 years later. Was that in part due to Drexel? Like this increased, must have increased funding For a lot of businesses to be able to issue these types of bonds and be able to do things, right? Like, sounds like it was a very big transformation in American finance.

A Yeah, I would do, probably do almost fully to Drexel and to what Mike created. So Mike came to Drexel in his twenties, uh, coming out of Wharton and he went to Drexel because Drexel was a company research firm on the street. And Mike's view was values created by having information and doing your own. So when he went out with the idea that he could identify companies that were rating went lower, he was sort of like, if you use a sports analogy, it was sort of like Wayne Gretzky. You know, rating agencies, a rate based upon the past, he's investing based upon the future. So Wayne Gretzky said, I don't skate to where the puck is, I skate to where I think the puck is going to go. Uh, as might develop credibility as he, as he talked to institutions about these bonds and got people interested in doing that. Drexel allocated funds to him to invest. He did very, very well with that. He developed, I guess, a cadre of investors who believed in what they were doing. So Drexel started for the first time to do original issues of high yield bonds. They actually, companies that did not have the track record You get investment rating, but that Drexel believed through its research and meeting management and understanding the industry would be successful. They started financing companies that could never get financing before. This is sort of where the term democratization of capital came from. S…

AI assessment note: “Yeah, I would do, probably do almost fully to Drexel and to what Mike created.”

Q Yeah, and Rudy, Rudy was obviously had very high political ambitions, right? So he wanted to do whatever he could to, to make himself look good and take people down.

A Yeah, I would say, you know, the lawyer who was a very, very well-known, uh, defense lawyer at the time that we retained initially, unfortunately died of cancer about a year and a half later, was a guy named, uh, Edward Bennett Williams, who started the Williams and Conley firm in Washington, DC. And when I first met, uh, Ed, this comment to me about Giuliani was, he's the biggest piece of political meat I have seen since Tom Dewey. Now, most people that are listed here have no idea who Tom Dewey is. Uh, but Tom Dewey, also the U.S. Attorney for the Southern District in New York, as was Mr. Giuliani. Tom Dewey went on and used that office to become the governor of New York and came very close to beating Harry Truman, ok, in 1948 to become president of the United States. Uh, so that was Tom Dewey. So yes, Giuliani was very politically ambitious. He probably had never heard of Michael Milk until this case started. That when he woke up the day after the investigation started and he saw the headlines in the paper, he became very interested in, uh, this case helping his political career.

AI assessment note: “So yes, Giuliani was very politically ambitious.”

Q the, by the late eighties, he was making like, I think it was a billion dollars over a four year period or, or maybe a billion, some huge amount of money relative to everyone else. Did that put a target on his back? Like why, why did they want to take down Michael Milken? What, what was, what was the, what was the energy of people who were against him?

A Yeah, I'm not so sure because he personally was making that much money because I don't know if people really realize that at the time, but Drexel was making a lot of money. If Mike was making that much money, Mike's deal that he'd made from Drexel at a time when it was a very small market was that something like 30, 30 some odd percent of the profits of his department would go to the bonus pool he could allocate. So if he was making that kind of money, Drexel was making over three times that much money. Yeah. So here they were basically taking market share. They were a disruptor. If you use today's term, they were a disruptor. Um, you know, a lot of people don't like Elon Musk as he's a disruptor. People didn't like Bill Gates at Microsoft because they were a disruptor. They, you know, people were after, uh, you know, number, you can note any number of technology companies. And so number one, he was taking market share. Number two, because he developed a market and people believe in what he was doing, he was able to finance people Who wanted to acquire other companies that they thought were undervalued in the market. So when he would start financing people that would do what they would call a hostile takeover, um, the companies that were established companies, companies like you, you know, California that had tremendous political clout were wondering, Hey, wait a minute, how co…

AI assessment note: “So yes, there was a huge target on their back.”

Q In February of 2020, President Trump actually granted, of course, Michael Milken a full pardon. What did that mean to you and to the Milken family?

A It meant a really a lot, Joe, in that Once Mike pled, and he knew this, that he pled, he now was going to go through the rest of his life with a cloud over him that he is a convicted felon, ok? And he, the only way to get any kind of acknowledgement that maybe he didn't deserve it, or he's not that bad, or he's done good things in his life, would be a presidential party. There's really no other way of doing it. I have a whole chapter in the book devoted to, we discussed it with the Clinton administration, we discussed it with the Bush administration, um, and, you know, and the pardon process and, and how you go through it. It, it, it met the world. Not only did President Trump grant him a pardon, but when he called Mike to tell him that he was getting a pardon, he said, you know, and this is a real pardon, this, you've never done anything for me. Okay. Um, you know, there's no quo here. It's a pardon. And then the White House issued a press release that went in great detail of the fact of what Mike has done in his life for, in the world of finance, for companies to get capital that couldn't get capital, what Mike had done in philanthropy and cancer research to save lives, and the fact that even in the press release it talked about that what Mike pled to were all novel, as I think the term they used, you know, novel interpretations of the law. So, you know, it meant, it meant a …

AI assessment note: “It meant a really a lot, Joe”

Q and didn't find anything, but, but it seems like if you're a successful person, like this is a thing is that they try to do whatever they can, including using your family, which It feels very third world to me. It feels like that's not how our country should work, right? I mean, was this offensive to you that they're going after his brother for this? It seems wrong, right?

A Well, yeah, and again, one of the reasons I wrote the book so people understand the process. So to give a little historical perspective, when the civil process developed, most of the respected lawyers, um, were in the civil world, not in the criminal law of a criminal defense world. And if you look at how these, the rules of civil litigation Uh, evolve. They're very fair. It's a very level playing field. So if you and I are involved in a civil case, if you subpoena documents from somebody or make a request for documents, I get a copy of everything you get. If you want to take someone's deposition, I get to come through the deposition. I get to ask questions. I get a copy of the transcript. Everything you know, I know. Everything I know, you know, through that process. Criminal process is very different. The government has tremendous power, probably given the power because prosecutors are supposed to be putting away people that are going after people that are dangerous to society, are really egregiously violating the law. So they have these powers that they're supposed to be using fairly and judiciously, but they're tremendous power. So in a criminal prosecution, the investigation starts. The only party that can get any information is the prosecutor. They have a grand jury. They could issue subpoenas and get documents. They could call you in front of the grand jury, take your de…

AI assessment note: “Well, yeah, and again, one of the reasons I wrote the book”

Q And what did you learn about media and public perception from all of this? Because it seems like you're just like implied if you're under investigation, they imply you're guilty. It seems really rough. Like obviously this whole thing must have been really hard from the public side. Like what'd you learn about that?

A You know, the media has tremendous power. We see it even more today with social media. None of that existed back then. Uh, we didn't even have a 24 hour, 24 seven news cycle out back then. So you really, where traditionally back then the idea was, if you're under investigation, don't talk to the media, don't do anything. You have to have a media policy. You have to basically tell your story. But I would say the number one advice that I would give that we did not do back in those days Um, what before you, if you're doing something, you're successful, you might come out of the public eye, get out of there and tell your story. Let people hear from you who you are and what you're doing. My view was he was considered reclusive. He didn't want, not want to talk to the media. So people wanted to interview him because they were getting more and more successful. He let people address. He'll do it. He did not want to be part of the media out there.

AI assessment note: “You have to have a media policy. You have to basically tell your story.”