ENCORE: Mike Milken: When Junk Was King | 187

We’ll be back next week with a brand new episode. In the meantime, we’re taking you back to the 1980s – a time of greed, glamour, and Wall Street excess – and revisiting the story of the “Junk Bond King,” Michael Milken. In the early 80s, Michael Milken pioneered a novel way to finance companies that traditional investors normally wouldn’t touch. His high-risk, high-reward investing strategy upended decades of Wall Street norms. And it made celebrities out of Michael and the corporate raiders he funded, like T. Boone Pickens, Rupert Murdoch, and Carl Icahn. Michael did make it possible for smaller companies to access capital. But he did it by breaking norms, ethical codes, and financial regulations in order to manipulate the system at every turn. Though, when stock brokers turn into snitches, even his billions can’t protect him. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Scaachi Koul?

  Audible subscribers can listen to all our episodes of Scamfluencers ad-free right now. Join Audible today by downloading the Audible app.

• 0:08Sarah Hagi?

  We'll be back next week with all new episodes of Scamfluencers. But first, let's rewind for a moment. Remember our episode on Michael Milken, the junk bond king who basically rewired Wall Street in the 80s?

• 0:21Scaachi Koul?

  Yes, I do. Milken was a junk bond pioneer who made billions funding corporate raiders and manipulating global markets. He helped fuel the decade of excess and then crashed hard when the government came after him for violating securities and tax laws.

• 0:35Sarah Hagi?

  Well, since our last episode aired earlier this year, Milken has been keeping busy, but in a very different way. On September 20th, he opened the Milken Center for Advancing the American Dream, or MADD for short. It's a new museum in Washington, DC that is, quote, "a cultural institution focused on illuminating pathways to opportunity for all."

• 0:57Scaachi Koul?

  I love that. I didn't know you could open a museum to your own nonsense. I'm gonna try that.

• 1:02Sarah Hagi?

  Yeah, it's basically a museum of capitalism. And the museum is located across the street from the White House, and it features five buildings of exhibits and immersive experiences that, according to a press release, allow visitors to "explore how ingenuity and perseverance have shaped the American dream across generations." Something is telling me there's more to the story than just that.

• 1:26Scaachi Koul?

  It also re-centers historical stories around bankers and other lending institutions. Take, for example, the Civil War. At MAD, the focus is on how the war introduced the greenback, aka federal paper money.

• 1:40Sarah Hagi?

  Enjoy this encore, and we'll be back next week with a very different kind of empire, one built on secrets, betrayal, and a CIA agent's double life.

• 1:49Scaachi Koul?

  But with Milken now curating the story of the American dream, we thought it was the perfect moment to revisit our episode on how he built and then rebuilt his empire.

• 2:05Sarah Hagi?

  Sachi, we've been doing this show for years now, and I have to ask, do you feel any closer to understanding how the stock market works at all?

• 2:16Scaachi Koul?

  No, no, I think I understand it less. I'm further from understanding it, I think. Now more than ever.

• 2:23Sarah Hagi?

  Yeah, it's like two steps forward, three steps back. But today is our lucky day because we have another story about an investor gone wrong. But this one is maybe the biggest doozy of them all. Michael Milken used a unique take on bond investing to become a self-made billionaire in the 80s. He seemed to be ushering in a new era for finance in America where more people had access to cash. But this did not end up being a Robin Hood scenario. I'm going to tell you how Michael made a mint and left behind the financial hellscape we're all living in today.

• 3:03Sarah Hagi?

  It's Memorial Day weekend in 1978, and the Atlantic City boardwalk is packed. New Jersey recently voted to legalize gambling, and the first casino in the city is celebrating its grand opening. Steve Wynn is especially excited about this. He's in his mid-30s with a full head of dark hair, a deep tan, and an easy smile. He already owns the Golden Nugget Casino in Las Vegas, and he's here today to check out the East Coast gambling scene. Steve elbows his way through the crowds of people swarming the craps tables, poker games, and slot machines. He sees the writing on the wall. Gambling in Atlantic City is going to be huge. And Steve wants in. He knows that opening a Golden Nugget

• 3:47Sarah Hagi?

  in Atlantic City would be a sure bet if he could get the investment capital. But at this time, most banks won't lend to casinos. They see them as threats to their reputations because of the stereotype that casinos do business with the mob. Plus, this is a big swing for Steve. Golden Nugget isn't a big-time company yet. It's only worth about $5 million. To enter the Atlantic City scene, he'll need to raise hundreds of millions of dollars. So Steve starts asking around for alternative investors. And a friend tells him there's one guy who can get this done, a trader named Michael Milken.

• 4:25Sarah Hagi?

  On the surface, Michael doesn't seem like a real player. The investment firm he works at, Drexel, is on the smaller side, and he isn't even in their New York office. He's in L.A., about as far away from Wall Street as you can get. But Steve is determined to make this deal, so he flies to California and visits Michael in his office in Century City. Michael is 32 years old. He's tall and as thin as a rail and has a very intense demeanor. Steve shares his vision for Atlantic City, and Michael sees the potential in it. He knows that if Drexel can help Steve's gambling company, they'll become the go-to place for casinos to get funding and corner a very lucrative market.

• 5:07Sarah Hagi?

  But now, they need to convince Michael's bosses back in New York. Michael tells Steve he should meet with them and suggests he dress conservatively. But when he asks if Steve owns Shoes with Laces, Steve has to admit he doesn't.

• 5:22Scaachi Koul?

  It's so crazy to think about someone like Steve Wynn in a time in his life where he was like, "Nothing but boat shoes."

• 5:29Sarah Hagi?

  Yeah.

• 5:29Scaachi Koul?

  Like, he didn't have every tuxedo shoe in the world.

• 5:33Sarah Hagi?

  Also, Steve Wynn is just Steve Wynn and not thinking of, like, Steve Wynn the casino.

• 5:38Scaachi Koul?

  Just some guy named Steve.

• 5:40Sarah Hagi?

  Even though Steve isn't big time yet, Michael assures him that he can persuade his firm's leaders to see things his way. What Steve doesn't know is that Michael is downplaying his influence. He's actually the most powerful person at Drexel. Going to see his bosses is basically a formality. What Michael says goes. When they get the green light, Steve and Michael get to work, and they're able to raise $160 million. A couple of years later, Golden Nugget Atlantic City opens to huge fanfare. Everyone wins. Steve gets his wildly successful casino, Drexel becomes a go-to firm for gaming interests, and Michael gets massive fees for putting it all together. Many years later,

• 6:24Sarah Hagi?

  Steve will say that Drexel, especially Michael, quote, "made him." The Golden Nugget isn't the only risky bet Michael is willing to take on because his business operates just like Steve's casino. The house always wins. Michael has been rigging the rules of the global financial system for years. And soon, everyone will know it.

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• 7:21Speaker 03

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• 7:44Sarah Hagi?

  From Wondery, I'm Sarah Haggy. And I'm Sachi Cole. And this is Scamfluencers.

• 7:58Sarah Hagi?

  Michael Milken is known as the king of junk bonds. In the early 80s, he pioneered a novel way to finance companies that traditional investors normally wouldn't touch. His high-risk, high-reward investing strategy upended decades of Wall Street norms, and it made celebrities out of Michael and the corporate raiders he funded, like T. Boone Pickens, Rupert Murdoch, and Carl Icahn. Michael did make it possible for smaller companies to access capital, but he did it by breaking norms, ethical codes, and financial regulations in order to manipulate the system at every turn. Though, when stockbrokers turn into snitches, even his billions can't protect him. I'm calling this one "Michael Milken: When Junk Was King."

• 8:47Sarah Hagi?

  It's early fall 1968, and Michael Milken is at a party for the new class of the University of Pennsylvania's prestigious Wharton School of Business. He's excited to meet his new classmates, people just as obsessed with finance as he is. Michael's 22 years old. He's a tall, thin Jewish guy who's already balding, and he's been a serious nerd since he was little. Growing up in a suburb of Los Angeles, Michael wowed his grade school classmates by doing complicated math in his head. At age 10, he started helping his accountant dad prepare clients' tax returns by sorting checks and balancing checkbooks. In high school, he only slept three or four hours a night and didn't drink, smoke, or do drugs. He didn't even drink carbonated beverages.

• 9:33Sarah Hagi?

  But he still managed to make a ton of friends. He was a cheerleader, along with his classmate Sally Field, and was even voted most popular. He started dating Lori, a shy, bookish girl with wide eyes and dark hair. She was voted most likely to succeed.

• 9:50Sarah Hagi?

  When Michael enrolled at UC Berkeley in the mid-'60s, the student body was fired up by anti-war protests. But that wasn't really Michael's scene. Instead, he focused on his passion: managing money. He convinced some of his fraternity brothers to let him manage their investment portfolios by offering a pretty good deal. He took 50% of all profits and 100% of the losses. In 1968, Michael and Lori graduated college and got married, just before Michael started business school at Wharton. Here's a picture of the happy couple, Sachi.

• 10:26Scaachi Koul?

  I mean, he just looks like some man, but she looks so cute.

• 10:29Sarah Hagi?

  Yeah, she looks so cute.

• 10:31Scaachi Koul?

  It's such a '60s wedding. She's got this fun veil and this baby doll dress. She's wearing long gloves. She's so cute.

• 10:38Sarah Hagi?

  Yeah. Well, Michael is probably thrilled to leave the West Coast hippies behind and get down to business with his new, like-minded classmates in Philly. But at his orientation dinner, he looks around the room and realizes that he is, once again, completely out of place. The Wharton guys are all blue-blood wasps with Ivy League credentials who smoke pipes and navy blazers. It's like they all speak a foreign language, and Michael doesn't know the translation. Michael thought he was back in a place where he'd fully fit in, but all he feels is a mixture of mockery, snobbery, and shame. That night, he tells a friend he's going to show up all these jerks and finish number one in the class.

• 11:21Sarah Hagi?

  He doesn't quite make that happen, but he sets out to find a job where he can use the old guard's own rules to hit them where it hurts: their pocketbooks. In 1974, Fred Joseph is settling into the New York headquarters of his new firm, Drexel Burnham & Co. Sachi, this firm changes names a lot throughout this story, so we are just going to call it Drexel. Fred has been hired as head of corporate finance. He's 37 years old, with graying hair and the thick frame of a former boxer. He was a COO and partner at his previous firms, and the brass at Drexel are putting him on the executive track. Like Michael, Fred doesn't come from a traditional finance background.

• 12:06Sarah Hagi?

  He grew up as the son of a cab driver in a blue-collar neighborhood in Boston. Sure, Fred went to Harvard for both undergraduate and his business degree, but he was on scholarship. And he boxed and drove cabs on the side to make money. Fred thinks of himself as an outsider, and the financial industry as an old boy's network in need of a major shakeup. Drexel is the perfect firm for him. It's a finance company, but it was founded in Philadelphia rather than New York. The firm has been modestly successful, but lately, it's been hemorrhaging clients and talent. And now, it's in dire straits. Fred sees this as an opportunity, and he's promised to make Drexel as big as Goldman Sachs within 15 years.

• 12:51Scaachi Koul?

  You know, it seems like these guys sort of want to like move fast and break things, and they want to change how things work. But it also seems like they want to engage in the system. So they're still interested in using the same mechanism that they think is broken.

• 13:05Sarah Hagi?

  Yeah, like, they say they want to change things, but they also want to get rich doing it. And to make that happen, Fred needs to find a way to give Drexel an edge. Now, he's on his way to meet a standout young employee who might be the key: Michael Milken. Michael has been working at Drexel for four years. A year earlier, he convinced them to give him his own department. He focused on a super niche business, trading in high-yield bonds, sometimes called junk bonds. The bonds have a higher risk of default, but if all goes well, the payouts can be big. They're basically high-risk, high-reward bets. And Michael's been a big winner.

• 13:46Sarah Hagi?

  Drexel gave him $2 million to invest, and he made 100% returns. However, his bosses at Drexel warned Fred that this wonderkind is kind of a weirdo. He commutes to the New York office from a suburb outside of Philadelphia. But Michael refuses to take the train, where he would have to socialize with lots of other Wall Street types. Instead, he gets on a bus at 5:30 a.m., wearing a toupee, a leather aviation cap with the ear flaps down, and a headlamp. He spends a two-hour commute reading financial filings by the light strapped to his head. No small talk, no interruptions.

• 14:24Scaachi Koul?

  This is a terrible way to live.

• 14:26Sarah Hagi?

  It is a terrible way to live, but it is also so tempting to be like, "I can forego all the small talk I have to make with familiar strangers."

• 14:34Scaachi Koul?

  Of course, I admire the headlight, I think, the most.

• 14:38Sarah Hagi?

  He is doing what people on TikTok say they do to, like, be successful.

• 14:43Scaachi Koul?

  Yeah.

• 14:43Sarah Hagi?

  But he's doing it for real. Fred has also heard that Michael can be difficult. He's patronizing and uncompromising, absolutely sure that his way is right. Can you read what one former Drexel executive later said?

• 14:57Scaachi Koul?

  Yeah, he said, quote, "He simply didn't have the patience to listen to another point of view. He was useless in a committee, in any situation that called for a group decision. He only cared about bringing the truth. If Mike hadn't gone into the securities business, he could have led a religious revival movement."

• 15:16Scaachi Koul?

  I get this myth-making around male executives, but I feel like it's always presented this way, where it's like, "He was an asshole, but he was so effective." Like, "He would yell at people, but people would listen to him." Like, fuck off. I hate it.

• 15:29Sarah Hagi?

  Yeah, you know, it's like one of those inspirational stories, which, as you will learn, does not end well.

• 15:35Scaachi Koul?

  Sounds right?

• 15:37Sarah Hagi?

  Fred walks onto the trading floor, where Michael is frantically talking on the phone and watching the ticker tape, a live feed that shows stock price updates. Fred introduces himself, but Michael never stops moving, or talking on the phone, or barking orders at the traders working for him. It's a bit disorienting, but Fred also relates to Michael right away. They're two of just a handful of Jewish employees at the firm, and they're both ambitious as hell. Fred sees something special in Michael. He might seem scattered, but this kid is making tons of money for the firm, and Fred is gonna find a way to maximize his value.

• 16:16Sarah Hagi?

  Eventually, Michael calms down enough to explain his investment strategy to Fred. He's focused on a niche way of raising money for companies that would otherwise struggle to get funding. A company's ability to get loans depends on its credit rating, the same way you have a credit score. The most established, well-run, and stable companies get a triple-A rating. And as a result, banks are happy to give them loans at low interest rates. Companies that have a lower profile or are less financially secure get lower ratings, and banks charge them much higher interest rates for loans. Some companies get such poor ratings that banks won't deal with them at all, no matter how high the interest rate goes. Michael tells Fred

• 17:01Sarah Hagi?

  that he thinks the credit rating system has a blind spot. It relies on the biases of the WASP-y snobs in charge. In his opinion, the two credit-rating institutions tend to undervalue some promising companies just because they've struggled in the past or because they're seen as unsavory, like casinos. That has left an opening in the market. Invest in companies with lower ratings that can turn things around and be profitable if they had a little extra cash.

• 17:32Scaachi Koul?

  Okay, I do appreciate that the point of this is to get money into the hands of people who aren't likely to be able to get these loans. So I can see how this is like a good idea that maybe gets perverted over time.

• 17:45Sarah Hagi?

  Yeah, I mean, they see them as a way to make more money. You know what I mean? It's not like this altruistic, pure kind of thing, so...

• 17:52Scaachi Koul?

  But I can see how it's at least helpful.

• 17:54Sarah Hagi?

  Exactly. And Fred is intrigued. He agrees that tradition has blinded Wall Street to major opportunities. Michael explains that he's made money by finding companies with bad ratings that could regain substantial value. Then, he pitches them to unconventional investors, guys with a lot of money but who can't get meetings with fancy Wall Street firms. These guys are more interested in making high-risk, high-reward bets. And these companies and investors will both pay Drexel gigantic fees for connecting them. Michael is the one bringing everyone together, making deals happen, and giving everyone the chance to make money. And he's collecting a hefty cut for Drexel.

• 18:36Sarah Hagi?

  This is the kind of advantage Fred has been looking for. If established firms aren't getting into junk bonds, that means Drexel can have the market practically to itself. Fred is convinced he has a true investment star on his hands. And he decides that if he wants to make his dream of running the biggest firm on Wall Street come true, there's one surefire strategy: give Michael whatever he wants. It's a snowy morning in late 1977. Michael wakes up to discover the pipes in his house have frozen solid. And when he backs out of the driveway, it's slick with ice, and he damages his car. This is the final straw. He hates it on the East Coast.

• 19:21Sarah Hagi?

  And by this point, Michael's had so much success at Drexel that he feels empowered to make a huge demand. He wants to move back to LA and take his entire division with him. This has been a long time coming. Lori wants to move back west and has a habit of playing "California dreaming" on their record player as a not-so-subtle hint. And in LA, Michael won't have to worry about his coworkers. Some people at Drexel don't really get what Michael is doing, and they ask a lot of questions. Being thousands of miles away would insulate him from the firm's bureaucracy and let him operate his division exactly the way he wants. His boss agrees, and because he's made them all so rich,

• 20:03Sarah Hagi?

  the 20 or so other guys who work for Michael agreed to move with him. In fact, Michael's such a rising star in the world of finance, his move merits a story in The New York Times. Here's a picture from that article, Sachi.

• 20:18Scaachi Koul?

  Isn't it funny that The New York Times thought that this guy moving from one place to another merited a spread in The Times? And then the spread itself does look like a yearbook page, where he's shown in his environment, like, looking stressed and tough, wearing a suit.

• 20:33Sarah Hagi?

  Yeah, it's totally one of those articles that's like, "Look at this fantastic new person, who we will not question further."

• 20:40Scaachi Koul?

  No, no follow-ups.

• 20:42Sarah Hagi?

  No follow-ups. Looks good.

• 20:46Sarah Hagi?

  Well, over the 4th of July weekend, Michael and Lori drive across the country to relocate. Michael claims she drove while he sat in the backseat reading corporate financial filings. Michael and Lori buy a place in Encino that used to be a guesthouse on Clark Gable's estate. He pays $750,000 for it, the equivalent of about $3.6 million today. And his division of Drexel sets up shop in a skyscraper in Century City.

• 21:16Sarah Hagi?

  Michael quickly sets the tone for the West Coast office. He demands the traders work New York hours, so they need to be at their desks by 4:30 a.m. And they're expected to work until 8 p.m., a 17-hour day. But he works even harder. The traders often arrive at the office to find notes Michael has already left on their desks. The trading floor is cramped, but that's how Michael likes it. He sits at an X-shaped desk in the center, so he can see, hear, and scream at everyone else. Breakfast and lunch are catered, and Michael hires women to pick up dry cleaning for his employees, go to the post office for them, wait at their houses for repairmen and deliveries, and take care of pets. A former trader later said,

• 21:59Sarah Hagi?

  "It's a slave ship out there, high-priced slavery." But even though conditions are brutal, his employees seem to worship him. One later says, "Michael is the most important individual who has lived in this century." Another says, "Someone like Mike comes along once every 500 years."

• 22:22Scaachi Koul?

  I would be embarrassed to say these things out loud about anybody. And also, I just don't think it's true that someone like Mike comes along once every 500 years, because we have done 150 episodes of this show. So there's clearly a lot of versions of him around.

• 22:37Sarah Hagi?

  You need to also realize these guys are richer than they ever thought they'd be.

• 22:42Scaachi Koul?

  Yeah.

• 22:43Sarah Hagi?

  And so they're willing to say, "Michael is my mom." Yeah, I mean, they're overworked, and he's made them rich, so of course they're going to do whatever he says. Well, before he left the East Coast, Michael had started an annual conference to spread the word about junk bonds. It was a way to bring companies and investors together. Now, he hosts a conference in L.A. In 1979, they all sit at a conference table and break down financial records. It's Michael's idea of a perfect day. Being the head of a new office and the leader of the annual Junk Bond Conference positions Michael as the head of a new movement. He's rich, influential, poised to single-handedly reshape finance,

• 23:28Sarah Hagi?

  and leave his haters in the dust.

• 23:32Sarah Hagi?

  It's spring 1985 at the Beverly Hills Hilton, the site of this year's annual Junk Bond Conference. 1,500 of the richest and worst men in the world are gathered to eat shrimp ceviche, down tequila shots, and cook out ways to tilt the financial system in their favor. It's been seven years since Michael moved to California. In that time, his junk bond business has boomed. He's proven that he can raise hundreds of millions, even billions, of dollars for companies like MCI Communications, MGM, and Golden Nugget. And of course, Michael and Drexel get their cut. The previous year alone, Drexel is estimated to have made at least $250 million in earnings.

• 24:17Sarah Hagi?

  At this point, Michael's taking home more than $135 million in yearly compensation. That's equal to more than $400 million today. On top of that, he's asking for equity in some of the companies he helps get funding for. And he's making investments based on what he knows about Drexel's clients, which you are definitely not supposed to do. But he's so far from Drexel's headquarters and is making them so much money that his boss doesn't seem interested in asking too many questions.

• 24:50Scaachi Koul?

  Great. Good. Of course, you shouldn't ask too many questions.

• 24:54Sarah Hagi?

  I wouldn't. Just don't ask. Don't worry about it.

• 24:57Scaachi Koul?

  Just trust it. Trust the process. Out of sight, out of mind. That always works.

• 25:02Sarah Hagi?

  Well, everyone at the conference today has bought into Michael's theory about junk bonds. The higher the risk, the higher the reward. But Michael and his boss Fred have a brand-new approach to introduce to investors this year. They're still focused on making Drexel the biggest firm in the world. To do that, they want to bring Drexel into the lucrative mergers and acquisitions space. It's a bigger market with the chance to make even more money. Right now, the space is dominated by high-profile investment firms who fund large companies taking over smaller ones. Michael and Fred decide this is another chance to fund the underdogs and corner a new market.

• 25:43Sarah Hagi?

  They want to fund individual investors who are looking to do hostile takeovers of companies, aka corporate raiders. Have you heard this term before, Sachi?

• 25:53Scaachi Koul?

  Yeah, it's basically when somebody tries to come in and take over a company. It's usually like an activist investor like Carl Icahn.

• 26:01Sarah Hagi?

  Well, I did not know that before this episode. But yes, banks have historically been hesitant to fund corporate raiders. So Michael and Fred sense a big opportunity. At the conference, Fred addresses the crowd and explains their new strategy. If an investor wants to make a play at taking over a company, Drexel will organize its network to raise huge amounts of money. Michael only has to make a few calls to his rolodex of investors, telling them what bonds to buy. No traditional banks required. It is impossible to overstate how big a deal this announcement is. This is a fundamental shift in the financial landscape. Sachi, can you please read how Fred describes this development to the audience?

• 26:45Scaachi Koul?

  Yeah, he said, "For the first time in history, we've leveled the playing field. The small can go after the big."

• 26:53Scaachi Koul?

  It's so funny that they are so compelled to make it seem like they're doing something noble in their pursuit of stuff and money.

• 27:01Sarah Hagi?

  Exactly. And the shift to empowering hostile takeovers is so big, it earns the conference a new nickname. From here on out, people call it the Predator's Ball.

• 27:14Scaachi Koul?

  Oh my god.

• 27:16Sarah Hagi?

  Some attendees are eager to start living up to this name. And they don't even have to wait for the conference to end. One evening, after a full day of conference sessions, a carefully selected group is invited back to the Beverly Hills Hotel Bungalow 8 for a very 80s cocktail party. Wives are explicitly banned, and beautiful women, some of them rumored to be sex workers, mingle with the businessmen as they wheel and deal and partake in a lot of booze and illicit substances. But this isn't all sex and coke. T. Boone Pickens, Nelson Peltz, Sir James Goldsmith, and Carl Icahn are among the attendees huddled together, plotting takeover bids.

• 27:59Sarah Hagi?

  The next day, at the final dinner of the conference, Drexel plays a parody of the Ghostbusters theme song with the lyrics, "Who are you gonna call when you want money fast?" Drexel. Then Diana Ross performs a medley of her greatest hits. But Fred's announcement is what keeps everyone buzzing. Drexel is bankrolling anyone willing to take a big swing. Reagan is in office and deregulation is king. Everyone wants to get rich. And Drexel's approach to corporate takeovers is about to fundamentally change the world economy forever.

• 28:40Speaker 04

  Journalist Tristan Redman goes where no son-in-law should ever go. Deep into his wife's family history, digging up the cold case of who murdered her great-grandmother. Because, I should mention, he thinks the murderer might actually be the beloved family patriarch. For the best binge-watch series like Ghost Story, listen to the Audible True Crime Podcast wherever you get your podcasts.

• 29:00Speaker 05

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• 29:37Sarah Hagi?

  A few months after the 1985 Predator's Ball, Michael gets a visit from Ted Turner. Ted is in his mid-40s with a thick head of hair and an impressive mustache. He's a mogul who turned his father's billboard business into a media empire. He owns TBS and founded CNN, the first 24-hour news network. Now, he wants Michael's help in making a major move, buying MGM, the film studio. Ted wants MGM's library of classic films like Gone with the Wind and The Wizard of Oz as content for TBS. But MGM is a huge company, and Ted's a bit strapped for cash at the moment. He needs Michael's help.

• 30:20Sarah Hagi?

  At the end of the summer, Ted announces his intent to buy MGM. Now, Michael needs to find a way to make sure this deal happens. So he calls his pal Ivan Boski. Ivan is in his late 40s, tall, trim, with light eyes and a pretty psychotic smile. He always wears black three-piece suits with a gold watch chain, like the one Winston Churchill wore. Like Michael, Ivan isn't your typical finance guy. He's from Detroit, and his dad ran a chain of topless bars. But Ivan married into money and now runs his own arbitrage firm, which basically means he bets millions of dollars on the outcomes of corporate takeovers. He's a millionaire many times over,

• 31:03Sarah Hagi?

  thanks to his willingness to do some not exactly legal wheeling and dealing. Oftentimes, these deals are with Drexel. By this point, he talks to Michael on the phone two or three times a day. That's a lot. That's a lot of money being moved around, it sounds like. They're making money moves. Yeah. Well, now, Michael pitches him a new deal. If Ivan buys shares in MGM for Michael and keeps Michael's ownership secret, they'll split the losses or gains 50/50. By having Ivan purchase the stock, it looks to the outside world like a savvy investor has confidence in Ted's bid. Riding that wave of investor confidence, Michael will convince his other clients to buy MGM stock,

• 31:48Sarah Hagi?

  which will ultimately help Michael raise the money needed to bankroll Ted's takeover of the studio. And Ted isn't Michael's only client in the deal. Michael is also representing MGM. The conflicts of interest are absolutely insane, but no one seems to bat an eye. Michael is working every angle of this deal, making money at every point along the way. He and Drexel raise the $1.4 billion that Ted needs, and the deal goes through. Drexel earns more than $66 million in fees for financing the deal, and Michael and Ivan make $3 million off the stock they illegally collaborated to buy.

• 32:28Scaachi Koul?

  You know, it sounds like Michael has figured out something kind of ingenious in this scam, which is that there's so many little steps to these financial transactions, and so he can peel a little bit of money off at all of these layers.

• 32:39Sarah Hagi?

  Yes, it's probably a lot harder to catch it. Yeah, it's so sophisticated, it would be next to impossible to catch. And he's making everyone so much money, who's gonna question him? Ted is just one of many upstarts getting a boost from Michael. Drexel helps Nelson Pelts, a man mostly known for driving his family's frozen food business into bankruptcy, raise the money to buy the National Can Corporation for $460 million. Drexel also raised $500 million to help a Chicago financier buy out Northwest Industries. And Drexel helped fund Ron Perlman's $2.7 billion takeover of Revlon.

• 33:20Sarah Hagi?

  At this point, Drexel controls about half of the $150 billion junk bond market, and is making more than $1 billion in annual revenues. But the person gaining the most is Michael. He has a way of carving out profit for himself on all his deals, which his coworkers at Drexel have started to notice. And they think Fred is willingly turning a blind eye to his constant self-dealing. Can you read how one Drexel worker later described Michael?

• 33:50Scaachi Koul?

  Sure. Quote, "In addition to being a talented, creative genius, Michael is among the most avaricious, ruthless, venal people on the face of the earth." Okay, I love that. That is iconic. I would love to be talked to like this.

• 34:05Sarah Hagi?

  Powerful, talented, creative genius, the worst person in the world? That's amazing. He has to hand it to him, however, he is the most evil man to have ever existed.

• 34:15Scaachi Koul?

  Yeah.

• 34:16Sarah Hagi?

  Well, Michael is basically in control of a huge segment of the global financial system. With just a few phone calls, he can change markets and raise billions. But the deals he's enabling come with strings attached, and the fallout has real consequences for average Americans.

• 34:35Sarah Hagi?

  In the early summer of 1986, just a few months after he closed the MGM deal, Ted Turner sits for an interview in his office in Atlanta. There are trophies covering the walls, including one for winning the America's Cup Yacht Race in the late 70s. Ted sits across from a reporter from Fortune magazine and kicks his bare feet up on his desk. He rolls a set of glass Tiffany dice in his hand as the reporter asks him whether the deal with MGM was a bad idea. He says, quote, "I may make a mistake someday, but buying MGM wasn't one of them." Ted sounds confident, but to close the deal, he had to take on an enormous amount of debt.

• 35:18Sarah Hagi?

  Now he owes Drexel and the other investors a lot of money. And if he doesn't pay it back quickly, he'll face sky-high interest rates. So he's left with one real option: selling off assets to pay everyone back. Ted has no choice but to strip the company for parts. In fact, just a few months after this interview, Ted ends up selling the home video, television, and film production units of MGM back to the guy he just bought the studio from. While the onslaught of hostile takeovers, or even just the threat of them, has created a new normal for corporate America: a volatile market with tons of mergers and takeovers, leading to restructuring, overhead cutting,

• 36:02Sarah Hagi?

  layoffs, and drastic cuts to research and development. Even companies that aren't the target of a hostile takeover have to change how they operate. They've got to focus more on takeover defense than developing long-term, sustainable business practices. Industries are becoming destabilized. The average worker is facing more precarity, all while Michael and his rich buddies get even richer. Does that sound familiar to you?

• 36:28Scaachi Koul?

  I know you're trying to tip me towards something in particular, but this sounds like everything.

• 36:32Sarah Hagi?

  Exactly. It sounds like everything that has ever happened in our entire lives. Comforting. Well, like the wizard in MGM's Wizard of Oz, Michael is running everything behind the scenes. But someone is about to pull back the curtain.

• 36:51Sarah Hagi?

  Ted Turner isn't the only one facing scrutiny from the press. Around the time of the MGM deal, a journalist from the American Lawyer magazine starts taking an interest in Michael's business. Connie Brock is a 40-year-old senior reporter with dark, shoulder-length hair with bangs, and she looks just as sharp in a power suit as the lawyers and businessmen she covers. I've got a picture of her from around this time. Sachi, what do you think?

• 37:18Scaachi Koul?

  She's Lois Lane. I love her already. She looks like she doesn't take any shit. She's wearing an oversized blazer, a pearl necklace, and she has a very sensible haircut.

• 37:28Sarah Hagi?

  I know, it's a great blowout. I mean, she looks like journalist I trust.

• 37:32Scaachi Koul?

  Yeah.

• 37:33Sarah Hagi?

  Well, Connie is curious about the world Michael inhabits. A few years ago, she wrote a profile of his frequent business partner, Ivan, for The Atlantic. She's fascinated by Michael and his band of raiders, who are, as she later writes, quote, "leading the revolt of an underclass to scale the walls of corporate America and depose the rich, credentialed, and powerful." While she actually kind of admires Michael, Connie has been a reporter long enough to know that when someone is making that much money, there's probably a story there. So she's writing a book about the junk bond movement. Connie's first move is to ask Fred if Drexel will cooperate. And surprisingly, he says yes.

• 38:15Sarah Hagi?

  Fred is very proud of how much money the firm is making, and he gives Drexel employees the green light to talk to Connie about their success. But while Fred might be excited about the book, Michael is pretty hostile to the idea. Connie goes to Boston, where Michael is speaking to a room full of finance bros. After the speech, Connie approaches him and explains her project. He tells her he doesn't want her to write the book. When she says she's writing it anyway, he offers to pay her the amount her publisher is paying her to not write the book. Here's Connie, a couple of years later, telling NPR's Fresh Air about what happened next.

• 38:56Speaker 06

  I said, "That was fine, but what would I do for integrity for the rest of my life?" Then he said, "Or why don't we pay you for all the books that you would have sold if you had written it?" So I guess what he thought was that he just hadn't ordered, had not offered a big enough price the first time.

• 39:10Scaachi Koul?

  You really have to admire Connie, because for most writers, to be offered a paycheck not to write, that is a gift, and it is a gift many of us would take.

• 39:20Sarah Hagi?

  Yeah, but also, if he's willing to pay that much money, then clearly she is close to like, a major, major scoop.

• 39:26Scaachi Koul?

  Yeah, it sounds like he's afraid of her.

• 39:28Sarah Hagi?

  Yeah, basically, Michael wants Connie to stay out of his business. But thanks to Fred's cooperation, Connie still learns a lot about him. His colleagues and clients are willing to talk, and increasingly, they describe Michael as moving from ambitious to compulsive. By Michael's own account, he's taking upwards of 200 phone calls a day, carrying on 10 conversations at once, buying and selling stocks all the while. He's working harder than ever, but some colleagues say he doesn't have the same kind of joy for this work that he used to. And some people think he's not paying close enough attention. They say Michael's confidence has outstripped his capabilities.

• 40:10Sarah Hagi?

  He also seems to be morphing from scrappy underdog to top dog. Around this time, Michael stops wearing mismatched socks and starts wearing fine tailored suits and French cuffs. He starts commuting to work in a chauffeured limousine and buys a Gulfstream jet. He used to eat lunch with his traders and sales staff using paper plates, but now, he demands to be served a catered lunch on fine china. His success seems to have gone to his head. Literally, he gets a fancy new toupee. Sachi, please check this out.

• 40:44Scaachi Koul?

  This is a shake-and-go wig that you buy from the beauty supply store.

• 40:50Sarah Hagi?

  It looks like it's on sideways.

• 40:53Scaachi Koul?

  It looks like a bunch of fake mustaches tied together. That's Michael for you.

• 40:57Sarah Hagi?

  He can't have everything.

• 40:59Scaachi Koul?

  A couple of months into her work on the book, Connie reads an article by a Washington Post reporter who did get access to Michael. Can you read what Michael reportedly said?

• 41:09Sarah Hagi?

  Yeah, he said, "The force in this country buying high-yield securities has overpowered all regulation."

• 41:15Scaachi Koul?

  This sounds ominous, but I don't totally understand what he means.

• 41:18Sarah Hagi?

  Well, Michael is basically saying that his coordinated network of investors is now so big and powerful, they overwhelm any government agency tasked with regulating them. So the way Michael sees it, what he and his associates are doing is effectively above the law. And if Connie has any doubts about Michael's shadiness before, they're almost certainly gone now. And before she knows it, the premise of her book will go from profiling a financial genius to keeping up with the most explosive Wall Street scandal since the Great Depression.

• 41:53Sarah Hagi?

  Just one month after Michael tells investors that he's above the law, his friend Ivan Bosky makes a much more public declaration about the power of finance. He's delivering a speech to the graduating class of Berkeley's Business School. Standing in an open-air, Greek-style amphitheater, surrounded by students in caps and gowns, Ivan takes the stage to tell the class all about how he lifted himself up by his bootstraps. Although, he seems to forget about all the help he got from his wealthy father-in-law. Toward the end of the speech, he strays from his planned remarks.

• 42:28Scaachi Koul?

  Sachi, can you read what he says?

• 42:30Sarah Hagi?

  Yes, he says, "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself."

• 42:41Scaachi Koul?

  I bet he has to say this to himself 10 times every night just to try to sleep. It seems like it's working. That sounds like something the craziest person you know tweets.

• 42:52Sarah Hagi?

  But also, Sachi, this is the inspiration for the infamous Gordon Gekko greed is good speech from the movie Wall Street, which comes out the following year. Ivan doesn't hang around for the rest of the ceremony or the reception. It might be because Ivan is way too busy to hang out with a bunch of kids who all want his job, but it also might be because Ivan has some heavy shit on his mind, like the fact that he's currently under federal investigation. Just days before giving this speech, federal agents arrested a managing director at Drexel and charged him with running a years-long insider trading ring. It's the biggest insider trading action ever brought by the SEC, and the feds promised that it's just the beginning.

• 43:36Sarah Hagi?

  And this is very alarming for Ivan. He's worked with a guy who got arrested for years, and he's been doing exactly the kind of insider trading that the SEC says they're now investigating. Ivan spends the next three months on pins and needles until he gets his very own SEC subpoena. And the questions are really specific. So specific that there's only one explanation. The Drexel managing director is working with the feds and has told them all about Ivan's financial crimes. So Ivan panics. He calls his accountant and demands that he destroys evidence of some dirty dealings between himself and Michael. Ivan doesn't tell anyone that the feds are snooping around,

• 44:21Sarah Hagi?

  but he acts strange all summer. He's irritable and moody with staff, even more than normal. Instead of carrying on at the Harvard Club bar, he sits in the sauna alone for hours. Unsurprisingly, he loses a lot of weight. Can you read what he tells one coworker around this time? He says, "I'm getting too old. I'm tired. One day, I'm gonna drop the keys to this office on your desk, walk out of here, and never come back." This is ominous and bleak, and it feels like he means it. Yeah, and in August, Ivan clearly is at his wits' end. So he hires a lawyer and admits he's been part of a massive criminal conspiracy.

• 45:04Sarah Hagi?

  His lawyers convince him to try for a settlement with the government by offering them an even bigger fish: Michael Milken. Ivan turns himself into the feds and agrees to flip on all his business associates and friends. And one of the first things they ask him to do is set a meeting with Michael Milken and wear a wire. In just four months, Ivan's gone from Wall Street to Goodfellas. Now, he'll try his hand at being an undercover agent and take a shot at the king of junk bonds.

• 45:38Sarah Hagi?

  A month after Ivan starts cooperating with the feds, he and Michael meet at the Beverly Hills Hotel. When Michael arrives at the suite, Ivan lets him in. They wait as a hotel employee lays out their room service spread. Ivan seems anxious to get down to business because he impatiently shews the hotel worker out. Once they're alone, Ivan says he's been served a subpoena from the SEC, and they want all of his records. Ivan's worried about their illegal dealings. He's especially concerned about a payment he recently made to Michael for $5.3 million. It was to settle what Ivan owed Michael for a series of shady deals. Ivan was in a hurry and didn't go through their normal process of masking his payments

• 46:23Sarah Hagi?

  by signing over real estate assets or selling stocks at below-market valuations. He just wrote Michael a check. Now Ivan insists that he and Michael get their story straight.

• 46:36Sarah Hagi?

  At some point, Michael gets spooked. He tells Ivan, "You've got to be careful. Electronic surveillance has gotten very sophisticated."

• 46:45Sarah Hagi?

  Michael leaves feeling unsettled. He calls Fred in New York and tells him that Ivan's acting weird. He asks Fred to hire someone to watch him. And on a Friday afternoon, a few weeks later, Michael's working at his desk as the markets close for the weekend. Suddenly, a trader reading the ticker tape shouts, "Oh, my God." The SEC has just announced that Ivan's been charged with insider trading and has reached a deal with them. He's paying a $100 million fine, the largest fee in SEC history, and is cooperating with an ongoing investigation. Michael doesn't show any outward signs of panic, but inside, he must be freaking the fuck out. Then, he gets a call from Fred.

• 47:30Sarah Hagi?

  They've just gotten subpoenas from the Department of Justice. That means another criminal investigation is underway.

• 47:39Scaachi Koul?

  Uh, yeah, game over. Game over. Their paranoia was deserved. The fun times are over. Brutal.

• 47:49Sarah Hagi?

  Michael does start to cover his ass by getting rid of evidence. Over the weekend, he calls one of his traders back into the office. He takes him to the bathroom and turns the water on. Leaning over the sink, he lies and tells the trader that there are no subpoenas and says, "Whatever you need to do, do it." Michael's been the big boss for more than a decade now, but he's about to learn that when everyone has to save their own ass, there will be no honor among these thieves.

• 48:22Sarah Hagi?

  When Fred hears about Ivan's deal with the SEC, he's probably shocked. He knows Michael has had dealings with Ivan, but he doesn't believe his star employee could have been a part of anything illegal. Michael's one of the richest men in America, and Drexel has given him everything he's asked for. And Michael insists to Fred, over and over again, that he's done everything above board. But not everyone shares Fred's confidence. The Wall Street Journal starts publishing details of the SEC investigation and names Drexel as a target. They also make public that Drexel is being investigated by a federal grand jury. In response, the Dow drops 43 points, the fourth-largest single-day drop in history.

• 49:09Sarah Hagi?

  Desperate to save its crumbling reputation, Drexel starts running a PR campaign about how, actually, junk bonds are good. It's called Junk Bonds Keep America Fit, and the print and TV ads echo Michael's message that Drexel is democratizing capital. Fred even joins other Drexel employees in a music video, a spoof of Billy Ocean's "When the Going Gets Tough, the Tough Get Going."

• 49:35Scaachi Koul?

  I have such a niche interest in the weird things companies do when they're falling apart. This sounds exactly right.

• 49:42Sarah Hagi?

  Yeah, it's like this last grasp at their influence. They're like, you know what? Music will unite people. And you're like, no, shut up. Everyone hates you.

• 49:51Scaachi Koul?

  It's so defensive.

• 49:52Sarah Hagi?

  Also, Michael continues to maintain that he's done nothing wrong. So Fred and Drexel also work to rehab Michael's reputation. Drexel starts referring to him in the press as "a national treasure." Michael starts spending a ton of time talking about solving the Latin American debt crisis. He also starts the National Educator Awards, where winning teachers get $25,000 apiece. In March 1988, more than a year after the world learned about his deal with the feds, Ivan reports to prison. A couple of weeks later, Fred flies to LA for the annual Predators Ball, where Michael lectures everyone about inspiring workers and solving Mexico's economy.

• 50:36Sarah Hagi?

  But Fred isn't thinking about social issues. He's panicking about Connie's upcoming book titled "The Predators Ball." Connie agreed to let Fred review some parts of the book before publication so he could respond to any factual errors. And as Fred reads the manuscript, he kicks himself for letting her have so much access. Instead of the victory lap he was hoping for, the book is an indictment of Michael, Drexel, and the entire junk bond frenzy. So Fred and Drexel go on the offense against her book. They contact hundreds of reviewers, claiming the book is riddled with errors. They're hoping to destroy the book's credibility, but the supposed errors were trivial at best. Plus, as you and I both know, Sachi,

• 51:20Sarah Hagi?

  reviewers are not fact-checkers. They don't seem to care. It doesn't work, and the book comes out in June 1988. Three months later, Fred develops a lingering cough. He still believes Michael is innocent, but years of brewing legal issues and fighting to keep Drexel solvent is taking its toll. This is when the SEC finally files its lawsuit against Drexel and Michael for fraud, racketeering, insider trading, manipulation of stock prices, and inaccurate record-keeping, among other charges. And these headlines propel Connie's book onto the bestseller list.

• 51:59Scaachi Koul?

  All I ever want in these stories is for a woman who is a journalist to succeed beyond everybody else. That's all I ever want.

• 52:08Sarah Hagi?

  It's also so funny that they're trying so hard to make it so that her book wasn't seen by doing things that would only intrigue anyone.

• 52:17Scaachi Koul?

  Yeah.

• 52:18Sarah Hagi?

  Two months later, on a rainy night in November, Fred is getting ready to go to a black tie dinner at a hotel in Times Square when Drexel's head lawyer calls. He tells Fred that he needs to see him right away. So Fred picks the lawyer up in a cab and they ride uptown together. The lawyer breaks the news. After reviewing trading records, he's come to the conclusion that the SEC is right. Michael's office has been up to some shady shit. There's even a taped conversation where one of Michael's underlings seems to acknowledge that Drexel was steeped in illicit dealings. In the conversation, the underling called it, quote, "the world of sleaze." Fred is finally convinced.

• 53:03Sarah Hagi?

  When they arrive in midtown, he steps out of the car into the pouring rain. His faith in Michael has been shattered. And now he knows what he needs to do to protect Drexel and its 10,000 employees: throw Michael under the bus.

• 53:19Scaachi Koul?

  I don't think that's a bad instinct, right?

• 53:22Sarah Hagi?

  It's not a bad instinct, but it is kind of shocking from the guy who basically made Michael turn a blind eye to weird stuff and profited immensely himself.

• 53:33Scaachi Koul?

  I guess it's just a testament to how selfish these people really are. It doesn't matter if you're the protege, if you built the thing, if they loved you once. It doesn't matter. Everybody is out for themselves, especially in these industries.

• 53:46Sarah Hagi?

  It's just like podcasting.

• 53:47Scaachi Koul?

  Yeah, I would slit your throat in a heartbeat.

• 53:50Sarah Hagi?

  I would do the same, too.

• 53:51Scaachi Koul?

  I would do it even if I didn't have to.

• 53:53Sarah Hagi?

  Okay, now you just want to kill me for no reason? All right.

• 53:58Sarah Hagi?

  About a month later, in January 1989, Drexel reaches a deal with the US Attorney's Office. They plead guilty to six felony counts and agreed to a $650 million fine to settle criminal charges in the largest securities fraud case of all time. As part of the deal, Drexel still needs to settle civil charges filed by the SEC. Three months later, the Justice Department charges Michael with 98 counts of racketeering, securities fraud, insider trading, mail fraud, and other crimes. In the summer of 1989, President George H.W. Bush hammers the final nail in Michael's coffin. He signs legislation requiring savings and loans to sell

• 54:43Sarah Hagi?

  their junk bond holdings by 1994. The junk market collapses. Fred once saw his partnership with Michael as a way to upend the financial system by making it more equal and getting rich in the process. Blinded by his ambitions, now Fred can't separate himself from Michael's fate. With a recession rocking the country and a trial pending, Michael becomes the face of an era defined by greed. But like a true guru, Michael will pivot away from blame and find a new spin to keep exerting his influence.

• 55:26Speaker 03

  A trucker merges onto the I-10 in New Orleans. He checks his mirrors. The lane is clear. And then, boom, impact. A pickup truck, seemingly out of nowhere, scrapes down the side of his 18-wheeler, multiple passengers inside. One man flees the scene, and the driver of the pickup, he doesn't seem all that upset. It didn't feel like a regular accident, because it wasn't. Across the city, truckers are getting sideswiped, all on the same stretch of the same freeway. And behind many of the cases is one person, a Hollywood stunt woman turned personal injury lawyer named Vanessa Moda. This podcast is a story about fake accidents that lead to real consequences and a scheme that ends in betrayal and murder.

• 56:11Speaker 03

  Listen to Over My Dead Body: Operation Sideswipe wherever you get your podcasts. Audible subscribers can binge all episodes early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts or Spotify.

• 56:26Speaker 07

  Hey, I'm Cassie DePecce, the host of Against the Odds from Audible Originals. In each episode, we share thrilling true stories of survival, putting you in the shoes of the people who lived to tell the tale. In our latest series, we track the story of Hugh Glass, the real-life revenant that inspired the 2015 film starring Leonardo DiCaprio. In 1823, Glass was brutally mauled by a grizzly bear in present-day South Dakota and left for dead. His survival depended on trekking through 350 miles of wilderness alone with grave injuries, but he was driven by his thirst for revenge. Follow Against the Odds wherever you get your podcasts. Audible subscribers can binge all episodes of Against the Odds early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.

• 57:19Sarah Hagi?

  In February 1990, more than a year after Drexel settled with the government, the firm declares bankruptcy. Michael resigned from the firm after the settlement, so he can only watch from afar as the company collapses. Michael has been fighting his charges fiercely. Up until the final minute, Michael's wife, his brother, and even his mom urge him not to plead guilty. But as time goes on, more and more of his associates take deals and turn on him. In April 1990, Michael pleads guilty to six securities and reporting violations. As part of this deal, he owes $600 million in fines. Later that month, Michael pulls up to a Manhattan courthouse in a limousine.

• 58:03Sarah Hagi?

  He walks in the front door, looking pale and underweight, his eyes even more sunken in than usual. A huge crowd of press, TV crews, and onlookers are gathered on the courtroom steps. Michael stands before the judge and attempts to read his confession aloud. He chokes up as he says, quote, "I realize that by my acts, I have hurt those who are closest to me. I am truly sorry." Then Michael trails off and falls into his lawyer's arms, sobbing.

• 58:34Scaachi Koul?

  I want to feel sorry for him. It's hard to because I'm sure he knew he was doing something wrong.

• 58:41Sarah Hagi?

  Yeah, you know what? I actually don't think you need to feel sorry for him at all.

• 58:44Scaachi Koul?

  Yeah.

• 58:45Sarah Hagi?

  I guess it's more like this is designed to get me to feel sorry for him, and it's maybe not working. Over the summer, a recession grips the country, and the swoon time of the 80s is officially over. Public sentiment turns against Michael in a big way. In November, Michael returns to the courtroom for sentencing. The prosecution reiterates that his crimes were marked by greed, arrogance, and betrayal, all part of a master scheme to acquire power and accumulate wealth. Michael cries again, but the judge isn't interested. In a stunning move, she sentences him to 10 years in prison. Michael is also banned from trading securities for the rest of his life.

• 59:27Sarah Hagi?

  Dazed, Michael struggles to understand what just happened. His family ushers him into a back room. He asks, "How much did I get? Two years?" His lawyers have to explain it all over again. Michael is shocked, and he and Lori go into a small witness waiting room. We don't know exactly what they say to one another, but first Lori and then Michael scream. And when a lawyer bursts into the room, he finds Michael collapsed in a chair, hyperventilating.

• 59:58Scaachi Koul?

  This guy's kinda...

• 1:00:01Scaachi Koul?

  He's kinda pitiful when he gets in trouble, huh?

• 1:00:04Sarah Hagi?

  Often, I sense that scammers imagine the moment where they're gonna get caught and that they kind of know something's coming. But he just seems so shocked in a way that makes no sense to me.

• 1:00:16Scaachi Koul?

  Yeah.

• 1:00:17Sarah Hagi?

  In March 1991, Michael reports to a federal minimum-security prison in Pleasanton, California. He works 37 hours a week in maintenance and construction. The prison doesn't allow for hair pieces, so Michael has to resort to wearing a baseball hat. But don't worry, he isn't learning a single thing from this entire experience. Michael hires Alan Dershowitz to try and get his sentence reduced. Alan claims Michael is the victim of antisemitism and says he was "never motivated by money." Michael tells friends and family that he no longer thinks he did anything wrong, and he regrets pleading guilty.

• 1:00:56Scaachi Koul?

  Of course Alan Dershowitz makes an appearance here. That feels right.

• 1:01:00Sarah Hagi?

  I mean, where else would he be? Well, Michael's sentence is actually shortened after he cooperates with prosecutors. And after serving less than two years, Michael is freed. He decides not to bother with the toupee anymore. And don't worry, he's still insanely rich. Like, he is still a billionaire. One month after he gets out of prison, Michael announces that he's been diagnosed with prostate cancer. And he is about to weaponize this diagnosis to launder his reputation and launch one hell of a second act.

• 1:01:38Sarah Hagi?

  Just nine months after he's diagnosed, Michael is in Washington DC. He's presiding over a dinner for his new prostate cancer fundraising group. More than 100 guests welcome him with open arms, including House Speaker Tom Foley, Senator Dianne Feinstein, and Quincy Jones. It hasn't even been a year since Michael was in prison, but he's cast himself in a new role: cancer victim and philanthropist. And it is working beyond his wildest dreams. Can you read what former Democratic Congressman Tony Colallo said about him at the dinner?

• 1:02:13Scaachi Koul?

  Yeah. He said, quote, "The symbolism is interesting. Here is one of the most successful men in the history of American finance who has ended up with cancer. What that says is no matter what your success, financially or otherwise, no money, no power can prevent a deadly disease from attacking you."

• 1:02:31Sarah Hagi?

  Yeah, I mean, I don't know, is that profound?

• 1:02:35Scaachi Koul?

  It's not. Everybody gets sick and dies? Yeah, no shit.

• 1:02:39Sarah Hagi?

  Also, this insane washing him clean of his crimes. It's like, you know, he's so successful and he ended up with cancer. Yeah, I mean, listen, we can go on and on about

• 1:02:50Scaachi Koul?

  This is silly.

• 1:02:51Sarah Hagi?

  how this will drive us crazy and we will end up pulling our hair out.

• 1:02:54Scaachi Koul?

  Okay, yeah, you're right.

• 1:02:56Sarah Hagi?

  Michael tells people he's working with Michael Jackson to start an educational cable channel. He's also lecturing business students and, of course, writing his autobiography. But obviously, this isn't all he's up to. Two years later, Michael is in remission, and he's back to his old puppeteer routine. He's working with Rupert Murdoch and the chairman of the communications firm MCI, helping the two make a massive business deal. Michael even has one of his associates drive the MCI chairman to Rupert's offices and stay there until the two hammer out an agreement. MCI agrees to invest as much as $2 billion in News Corp. And News Corp pays Michael $27 million

• 1:03:40Sarah Hagi?

  in quote-unquote consulting fees. Now, you might be asking, doesn't this violate Michael's ban on trading securities for life? The SEC wondered that too, so it opened an investigation. They find that from 1993 to 1996, Michael was involved in tons of major transactions or proposed transactions, and that he got paid around $92 million. In February 1998, Michael agrees to pay the SEC a $47 million settlement, and in return, they won't pursue criminal charges for violating his consent decree. But public perception continues sliding in Michael's favor. President Bill Clinton even suggests maybe Michael should be pardoned,

• 1:04:25Sarah Hagi?

  which the SEC protests with a strongly worded letter. Michael continues to raise money for cancer research and other medical causes. And in 2020, Donald Trump pardoned Michael officially, though it doesn't lift Michael's lifetime securities trading ban.

• 1:04:42Scaachi Koul?

  Oh, well, it's nice to hear Trump using a little bit of restraint here and there. Generous but cautious.

• 1:04:49Sarah Hagi?

  Yeah, that is what you always say.

• 1:04:50Scaachi Koul?

  I'm always saying that.

• 1:04:51Sarah Hagi?

  Well, Michael isn't hosting the Predators Ball anymore. Instead, every year, he holds the Milken Institute Global Conference in Beverly Hills. It's supposed to be about tackling the world's most pressing problems with a dash of celebrity in Hollywood. Last year's headliner was Elon Musk. After all of this, Michael has never strayed from what he either believes to be true or is absolutely hell-bent on having us believe. As he told Fortune Magazine, "I have never been motivated by money in my entire life."

• 1:05:29Sarah Hagi?

  Sachi, I know Michael Milken was probably not the most vocally evil person he covered, but I do think the damage he's caused makes him one of the worst guys we've ever talked about in so many ways. He claimed to be so hell-bent on changing the system, but it actually was just changed to work in his favor. And I do feel like this all created an even shittier financial system, and we're dealing with all the issues of that still today, right?

• 1:05:57Scaachi Koul?

  Yeah, I guess he, in so many ways, helped create a blueprint for a kind of scam we've talked about over and over and over again.

• 1:06:04Sarah Hagi?

  Yeah, he's like the grandfather of scams in many ways.

• 1:06:08Scaachi Koul?

  Yeah, and a kind of scam that's so complicated and process-dense that most people I don't even think would be able to get their heads around it. I mean, despite the fact that you just told me this whole story for the last hour, I still am like half-sure what he did. I mean, the system, when it works, feels like it's full of shit. So of course, then when someone takes advantage of it, it's like, well, yeah, it still seems full of shit, I guess.

• 1:06:32Sarah Hagi?

  Yeah, I think the huge thing was that he and Fred made it sound like they were creating this opportunity to level the playing field for small businesses. And in that regard, people found it to be like, oh, now we can say we're doing something that is good and changing things up. But it had almost nothing to do with that. They just found an area to exploit and milk and milked it.

• 1:06:59Scaachi Koul?

  What do you make of all of his weeping and his flailing, his throwing himself into his lawyer's arms? A lot of dramatics.

• 1:07:06Sarah Hagi?

  I think he has always been in control and has always felt very unstoppable and that anything he wanted could happen. And I think this is the first time his life had been derailed in any way. And it had nothing to do with anything except for, obviously, him feeling sorry for himself. This guy has no soul at all.

• 1:07:27Scaachi Koul?

  Yeah.

• 1:07:27Sarah Hagi?

  His actions were so quietly sinister that most people don't even know they are to pin the blame on someone like him.

• 1:07:36Scaachi Koul?

  Yeah, it's scary to feel like somebody is writing rules you don't understand for a game that you barely knew you were playing.

• 1:07:43Sarah Hagi?

  But that you are playing no matter what.

• 1:07:46Scaachi Koul?

  Why do you think MGM keeps coming up so much in our episodes? Like, I feel like the ownership of that company, we're always playing in those sandboxes.

• 1:07:56Sarah Hagi?

  I think MGM is the perfect example also of a brand that represents so much glamour and like, it's like so shiny. And I think that everyone wants to be the person who's like, I'm gonna fix MGM. It's going to be me. But it's really just a name. It's like a shell of a company that kind of everyone's trying to hold on to.

• 1:08:21Scaachi Koul?

  Yeah, it's just fake legacy.

• 1:08:23Sarah Hagi?

  To hearken back to the olden days, you know what I mean?

• 1:08:26Scaachi Koul?

  We were once so innocent.

• 1:08:27Sarah Hagi?

  Yeah.

• 1:08:33Scaachi Koul?

  Follow Scamfluencers on the Audible app or wherever you get your podcasts. You can listen to all episodes of Scamfluencers ad-free by joining Audible. This is Michael Milken, when junk was king. I'm Sarah Haggy. And I'm Sachi Cole. If you have a tip for us on a story that you think we should cover, please email us at [email protected].

• 1:08:54Sarah Hagi?

  We used many sources in our research. A few that were particularly helpful were Connie Bruck's book, The Predator's Ball, James B. Stewart's reporting for The Wall Street Journal, and his book, Den of Thieves, The Junk Bond King's Next Move, Mike Milken's Revolutionized Wall Street, now in the Face of Insider Trading Investigations, The Beverly Hills Capitalist Explains His Next Assault on the World of High Finance by Edward J. Epstein for The L.A. Times. Our senior producer, Sarah Enne, wrote this episode. Additional writing by us, Sachi Cole and Sarah Haggy. Eric Thurm is our story editor. Fact checking by Lexi Peery. Sound design by James Morgan. Additional audio assistance provided by Augustine Lim. Our music supervisor, Scott Velazquez, for Frieson Sync.

• 1:09:37Sarah Hagi?

  Our managing producer is Desi Blaylock. Our senior managing producer is Callum Flus. Janine Cornelo and Stephanie Jens are our development producers. Our associate producer is Charlotte Miller. Our producer is Julie McGruder. Our senior producer is Ginny Bloom. Our executive producers are Jenny Lauer Beckman, Marshall Louie, and Aaron O'Flaherty for Wondery.

• 1:10:08Speaker 08

  Dr. Seuss's Cat in the Hat and Fish are back for a whole lot of wonderfully whimsical fun. What happens when you switch bodies with your best friend? Discover a caveman frozen in ice? Or make an alien so angry, he threatens to destroy the planet? Find out in season two of the Cat in the Hat podcast. The Cat and Fish are traveling the world in the great catastrophic cacophony cruiser, meeting genies, clown professors, cave trolls, and extraordinary characters along the way. With clever wordplay, imaginative rhymes, original songs, and stories celebrating curiosity, empathy, and creative problem solving, every adventure brings something new to discover.

• 1:10:50Speaker 08

  It's a world of wonderful words, big imaginations, and plenty of heart for the whole family. Listen to the Cat in the Hat podcast wherever you get your podcasts. Audible subscribers can binge all 20 episodes early and ad-free right now.