Junk bond financier Michael Milken was sentenced today to 10 years in prison for breaking federal securities and tax laws in the most celebrated case of financial corruption in Wall Street history. Milken, who sobbed at points during the sentencing, stood with his head down as U.S. District Judge Kimba Wood pronounced the stiffest punishment yet in the fraud scandals that have gripped Wall Street since the mid-1980s. In addition, she sentenced him to three years' probation during which he must work 1,800 hours a year in community service. Milken, 44, faced a maximum of 28 years but Wood's sentence is far stiffer than many had predicted. He must serve at least one-third of his prison term before he can be considered for release. ``I believe that a prison term is required for the purposes of general deterrence,'' Wood told a court crammed with 200 spectators, including many of Milken's friends and supporters. Wood said Milken's misuse of his leadership position constituted ``serious crimes warranting serious punishment and the discomfort of being removed from society.'' She said Milken was a man of ``talent and industry'' but that a long prison term was required to send a message to other possible securities-law violators. The judge said she considered evidence of additional crimes, including obstruction of justice by Milken in handing down the sentence. He was ordered to begin his sentence March 4, 1991. No federal prison was designated. The sentence capped the long, tumultuous saga of the former Drexel Burnham Lambert Inc. executive who was first implicated in an aggressive government insider trading investigation by speculator Ivan Boesky in 1986. Milken of Encino, Calif., personally made more than $1 billion through a junk bond empire that altered American corporate finance in the 1980s. Sobbing at times during the 90-minute hearing, he told the judge: ``What I did violated not just the law but all of my principles and values and I will regret it for the rest of my life. I am truly sorry.'' Before Wood issued the sentence, Milken's attorney Arthur Liman asked her to consider the financier's more than $360 million in charitable contributions and other acts of generosity. ``He will never repeat his mistakes. He is a changed person,'' Liman said. Assistant U.S. Attorney Jess Fardella countered that ``despite his talents and opportunities, Mr. Milken sought to multiply his success through the vehicle of fraud.'' Milken pleaded guilty in April to six counts of conspiracy and fraud related to illegal securities trading after denying a much broader array of accusations. None of the charges involved insider trading or junk bonds, the risky debt securities Milken turned into a tool for capital raising and corporate takeovers. As part of his plea bargain, Milken also agreed to pay $600 million in fines and restitution to defrauded investors, the largest penalty against an individual in U.S. history. The Wall Street fraud probe revealed seamy pockets of corruption at top firms during major investment deals and resulted in about 50 indictments. Boesky, by comparison, was sentenced to three years in prison and penalized $100 million after pleading guilty to one criminal count of lying to federal regulators. He served 18 months in prison. Before he was sentenced, Milken wrote an 11-page letter to Wood apologizing for his crimes and asking for a chance to rebuild his life by performing community service. ``I never dreamed I could do anything that would result in being a felon,'' Milken wrote. ``But I did break the law. I was wrong, and no matter how sorry I am I have to accept that fact.'' Wood delayed sentencing, originally scheduled for Oct. 1, for a hearing into government charges of additional crimes beyond Milken's guilty plea. Prosecutors revealed that Drexel paid Milken a total of $1.1 billion from 1984 to 1987, including $550 million the final year. That $550 million paycheck put him in the Guinness Book of World Records. Drexel in February filed for Chapter 11 bankruptcy protection. The firm was hurt by its 1989 guilty plea to six felonies, its agreement to pay $650 million in penalties and the collapse of the junk bond market. Regulators have pinned much of the blame for the savings and loan crisis on Drexel, accusing it of plundering S&Ls through its junk bond practices.
