Deal to settle suits against Milken on table

January 22, 1992|By Los Angeles Times

NEW YORK -- Lawyers are mulling over a proposed settlement package of $1.5 billion that would end all civil suits against former "junk" bond financier Michael Milken, an amount that would include $500 million directly from him, sources said yesterday.

The total also would include an additional $400 million already paid by Milken into a special Securities and Exchange Commission settlement fund, part of the $600 million in fines and penalties he paid when he pleaded guilty to six felony counts in 1990.

But the federal judge in New York who has been pushing for a global settlement said that many obstacles remained.

The talks are aimed at settling the scores of lawsuits pending against Milken, many of them class actions, involving hundreds of individual plaintiffs. The suits include large claims against Milken by the Federal Deposit Insurance Corp., and by his former company, Drexel Burnham Lambert, which is in bankruptcy proceedings.

The unusual attempt to settle numerous diverse lawsuits under a single accord is being pushed by U.S. District Judge Milton Pollack, who also is presiding over Drexel's bankruptcy case.

Milken's lawyers are known to favor the settlement, to spare him litigation that would drag on for years in courts around the United States. Milken currently is serving a 10-year prison term.

Individuals familiar with the talks said that the large amount of money available makes the settlement attempt attractive to many plaintiffs, although a significant number have not yet agreed.

Sources said that the settlement package would include a $500 million contribution from Milken.

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