NEW YORK, SEPT. 25 -- Prosecutors have asked a federal judge to give convicted financier Michael Milken a stiff jail term to encourage his cooperation with the government, while Milken's lawyers argue that their client should instead be sentenced to serve time for stock fraud through community work with the Los Angeles Police Department.
In pre-sentencing memoranda submitted to U.S. District Judge Kimba Wood in Manhattan, federal prosecutors argue that a lengthy jail term is necessary to ensure that Milken lives up to his agreement to provide information on other suspected white-collar criminals after his sentencing, scheduled for next Monday.
Milken pleaded guilty to six felonies earlier this year and agreed to cooperate in exchange for the government's promise to drop 92 other charges, including several insider trading counts. Now, however, prosecutors' "confidence in Milken's intention to be truthful ... has waned" and, barring the fear of a long jail term, Milken has "little intention truthfully to cooperate," according to documents released today.
Milken's lawyers deny the government's claim, saying Milken has every intention of telling the truth.
The memos from Milken's attorneys and the prosecution were submitted to the court in recent weeks, and the ones from the defense were made public today. Wood delayed releasing the prosecution's memos by a day because she was dissatisfied with the way the government had deleted names of other people suspected of wrongdoing.
Many details from the prosecution's case were available, however, because the memos submitted by Milken's lawyers quoted heavily from the government's documents.
The prosecution's memo provides the most complete list yet of crimes that the government suspects Milken of committing through an intricate web of junk bond deals. Some of these allegations were detailed in the original indictment of Milken last year.
Other allegations, including alleged insider trading involving the stock of Caesar's World, Republic Airlines and Tiger International, had not been formally revealed until the defense memo was made public today. These charges were widely thought to have been included in a second, broader indictment that the government threatened to file unless Milken agreed to a plea bargain, which he did in April.
In the memos, prosecutors asked Wood to decide the stiffness of Milken's sentence by considering the entire list of misdeeds the government alleges he committed through various junk bond deals. The sentence could then be reduced in weeks ahead if Milken tells the government all he knows to help prosecutors bring charges against an array of businessmen, believed to include thrift executives, corporate raiders and well-known financiers.
The judge could sentence Milken to a maximum of 28 years in prison. The prosecutors have not specified the number of years they believe would constitute a stiff sentence; they agreed not to request a specific sentence at the time of the plea bargain. But five to 10 years is the number many criminal trial lawyers cite as being sufficient to "motivate" Milken to be truthful.
Milken, in memos from his lawyers, argues that his sentence should be determined strictly on the basis of the six crimes to which he has pleaded guilty and his record as a family man who has long been involved in community service and charitable activities.
Weighing his sentence on the basis of crimes for which Milken has not been charged, much less found guilty, would be unfair, Milken's lawyers argue in the memos. Instead, Milken should be allowed to do community service under the guidance of Los Angeles Police Chief Daryl Gates, who has written to the judge on why he believes community service would be a better sentence than prison.
In their memos, Milken's lawyers paint their client as a generous man who was not motivated by greed. They protested that the government's memo "includes no fewer than 25 references -- virtually all of them gratuitous -- to Mr. Milken's wealth and power in the first 25 pages alone."
The defense further complains that the government was seeking to have the court "view Mr. Milken's criminal conduct through the prism of wealth and power and sentence him as a symbol, not an individual."
Milken's laywers said he has paid his debt to society through the constant humiliation the government has subjected him to in the last few years, and through the $600 million in fines and restitution he agreed to pay. In portraying Milken's longstanding generosity, his lawyers said he contributed his "modest allowance money" to charity, even as a schoolboy.
If Judge Wood decides Milken must be imprisoned in addition to doing community service, however, Milken's lawyers argue he should be forced to spend time in a halfway house in the community rather than in a jail cell.