Mar 4, 2024 · 1h 5m · capital-allocators
Richard Sandler – The Prosecution of Michael Milken (EP.372)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Host Ted Seides interviews attorney Richard Sandler to re-examine the landmark 1990 prosecution of Michael Milken, exposing how prosecutorial overreach, media sensationalism, and technical regulatory charges overshadowed the true legal record.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 19.2% of the talking time here. How this is scored →
Ted as informed peer 4.3 Guest teaching 5.8 Guest disagreement 3.0 Ted pushing back 1.7
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 55:20 Sandler's rejection of Den of Thieves credibility
Sandler forcefully dismisses James B. Stewart's book, pointing out that Stewart chose to believe Ivan Boesky while burying Milken's documented defense in the endnotes.
Hardest push from Ted ▶ 28:45 Ted presses on prosecutors' true motivationsTed challenges Sandler's framing by questioning whether prosecutors genuinely believed they were seeking the truth rather than acting on purely malicious or careerist motives.
Biggest teaching moment ▶ 44:05 Sandler breaks down the non-insider trading chargesSandler educates the audience and host on how an offhand 'I'll make it up to you' comment was converted into an unprecedented criminal charge of aiding and abetting a false 13D filing.
Ted holds their own ▶ 59:52 Ted links Milken's self-critique to Sandler's analysisTed connects insights from his previous interview with Michael Milken about the danger of allowing others to define you directly to Sandler's legal takeaways.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Early Friendship and Joining Drexel's West Coast Expansion | 3 | 3 | 1 | 1 | Ted opens with broad biographical questions about Richard Sandler's lifelong friendship with Michael and Lowell Milken. Sandler recounts their childhood in San Fernando Valley, attending UC Berkeley, and his eventual recruitment to Drexel's Los Angeles office in 1983. | |
| The Ivan Boesky Subpoena and Defense Assembly | 4 | 5 | 2 | 1 | Sandler details receiving the first subpoena referencing RICO after Ivan Boesky's plea in November 1986. He explains his early naivety regarding federal investigations and describes learning the immense power prosecutors wield in grand jury proceedings. | |
| Wall Street Hostility, Witness Immunity, and Expanding Theories | 5 | 6 | 3 | 2 | Sandler explains how Wall Street incumbents and corporate targets resisted Milken's financing of hostile tender offers, prompting complaints to regulators. He educates Ted on how federal prosecutors expanded their theories beyond insider trading to securities parking using witness immunity. | |
| Prosecutorial Overreach and Drexel's Separate Settlement | 5 | 7 | 4 | 3 | Ted probes whether prosecutors genuinely believed they were seeking truth, and Sandler details the institutional incentives within the SDNY to secure convictions at all costs. Sandler explains the systemic structural flaw where defendants cannot present evidence without exposing their defense. | |
| Sponsor Message: Ridgeline Modern Investment Technology | 4 | 6 | 3 | 2 | Following the mid-episode sponsor break, Sandler analyzes why Drexel settled independently, citing the devastating asset freeze experienced by Princeton Newport under RICO. He highlights Rudy Giuliani's political ambitions using the SDNY as a stepping stone. | |
| Negotiating the Plea: Six Non-Insider Trading Regulatory Violations | 5 | 7 | 3 | 2 | Sandler breaks down the specific six counts Milken pled to, emphasizing that none involved insider trading and that the economic damages were assessed at zero. He walks Ted through technical regulatory violations such as the 13D filing issue and commission recoupment. | |
| The Fatico Hearing, Severe Sentencing, and Drexel Bankruptcy | 4 | 6 | 3 | 1 | Sandler details the subsequent bankruptcy of Drexel due to commercial paper market illiquidity and recounts the contentious Fatico sentencing hearing before Judge Kimba Wood. He explains how the resulting 10-year sentence shocked the defense after prosecutors failed to prove extra crimes. | |
| Dismantling the Misconceptions in Den of Thieves | 4 | 7 | 6 | 1 | Sandler sharply critiques James B. Stewart's bestseller Den of Thieves, recounting his personal meetings with Stewart and alleging that factual rebuttals were relegated to endnotes. He argues the author uncritically favored Boesky's self-interested testimony over verifiable transaction records. | |
| Authoring the Record, Milken's Mistakes, and Prosecutorial Reform | 5 | 5 | 2 | 2 | Ted references Milken's own appearance on the podcast to discuss personal errors and media reticence. Sandler reflects on teaching the case at Stanford Law School and advocates for structural prosecutorial reforms to introduce downside accountability when the government overreaches. |
Statements from this episode (16)
Sandler: Milken moved his entire Drexel department from New York to LA in 1978
“Mike had moved from New York to Los Angeles in 1978, and moved his whole department with him.”
Sandler: Targets of federal criminal investigations have virtually no discovery rights
“You have really no rights as a person under investigation. You don't have a right to ask them questions. When they subpoena documents, you don't get a copy of the subpoenas documents they get from other people. They subpoena people to appear in front of grand …”
Sandler: Ivan Boesky did very little trading with Drexel Burnham Lambert
“Ivan Boski was probably the most revered and respected risk arbitrageur on Wall Street. He had accounts with every firm. In fact, he did very little trading with Drexel. He was probably the largest equity buyer of securities of stocks at the time for any firm …”
Sandler: Non-investment-grade original debt issuance was unheard of before Michael Milken
“The idea of a new issue of a high-yield security, our new issue of debt security for a company that Could not get an investment grade was unheard of when Mike came to the market.”
Sandler: Wall Street establishment targeted Milken after Drexel enabled hostile takeovers
“So Mike was an attractive target because he really wasn't liked by a lot of people in the business round table and in the established firms. He was getting a lot of publicity. He was very successful. And so people complained to the SEC, they complained to Cong…”
Sandler: Michael Milken was charged with 98 counts across 12 transactions
“I think there were 12 transactions in the indictment. 98 counts.”
Sandler: Drexel settled federal charges for $650 million in penalties and disgorgement
“They paid a very large fine. I think they paid six hundred and fifty million dollars out. Part of that went as a criminal penalty, and part of that went to as an SEC disgorgement fund, because they settled with both the SEC and the U.S. Attorney”
Sandler: Prosecutors threatened to destroy Princeton Newport unless it aided Milken prosecution
“The prosecutors at the time had told the principals and the lawyers for Princeton Newport that they're going to run over them. They're going to destroy them unless they help them against Michael Milken and another Case that was under investigation at the time,…”
Sandler: Princeton Newport collapsed before trial under RICO before winning on appeal
“The firm was out of business before the first witness was called in the trial, because under RICO, you could create a freezing of assets, and as a financial institution, that's very, very difficult. So, even though Princeton Newport case was reversed on appeal…”
Sandler: Milken pled to violations never previously criminally prosecuted
“We actually found things to plead to, none of which had ever been subject to criminal prosecution before, many of which hadn't probably even been enforced as regulatory violations before, but we found things that he could admit to.”
Sandler: Judge assessed market damage from Michael Milken's violations at zero
“Interesting enough, when the judge assessed the economic damage to the marketplace from everything Michael pled to, included on the three counts that related to Bosque, that the total economic effect of these violations was zero. Not one penny was lost.”
Sandler: Drexel collapsed after funding unsold inventory with commercial paper
“What had happened is, to prove they could still get deals done, they were taking a lot of securities that they couldn't sell into inventory, and they were financing it by issuing commercial paper in the commercial paper market. So in financial parlance, they w…”
Sandler: Milken received a 10-year sentence via consecutive two-year terms
“And she gave him a ten-year sentence, which number one, negated what we thought was a cap of five years. Because she gave him two years on five counts to Z serve consecutively, not concurrently.”
Sandler: James Stewart never questioned him on claims made in 'Den of Thieves'
“He met with me twice. Never asked me one question about things he said about me in the book, some of which are not true.”
Sandler: Milken's sentencing judge told parole commission no further wrongdoing was proven
“The judge who sentenced Mike, who held the Fatico hearing, wrote a letter to the parole commission on Mike's behalf, indicating that she held the Fatico hearing, and she did not believe that any further wrongdoing other than what he pled to could be shown, eve…”