Onetime junk bond king Michael Milken—who was sentenced to ten years in prison in 1990 after pleading guilty to six counts of conspiracy and fraud, but served only two after ratting out his friends—stands to turn a profit on tax breaks meant to encourage development in poor areas called “opportunity zones.” Milken’s non-profit Milken Institute lobbied heavily for the incentives as a boon for distressed areas; as The New York Times points out, “the Milken Institute’s advocacy of opportunity zones is public, [but] Mr. Milken’s financial stake in the outcome is not.”
Through the Institute, Milken reportedly pushed key players in the Trump administration to make those tax breaks more generous, and to expand the opportunity zones to include wealthy areas adjacent to distressed ones, where he’s already got his money at work, reports the Times.
According to internal Treasury Department emails, Treasury Secretary Steve Mnuchin, an old pal of Milken’s, was happy to help. Last year, at the behest of Milken’s business partner and other landowners, Mnuchin personally directed the department to ignore its own guidelines on how to select opportunity zones and give the classification to a 700-acre site near Milken’s vacation palace in Lake Tahoe, Nevada, where Milken is heavily invested in a real estate project.
The move came soon after Mnuchin and Milken got together at the Milken Institute’s annual conference at the Beverly Hilton, where his infamous “Predators Ball” took place in the 1980s, when Milken was at his height and became an inspiration for Wall Street’s Gordon Gekko.
“People were troubled,” says Annie Donovan, who once ran the Treasury office that designates areas as opportunity zones, by Mnuchin’s intervening to change the rules in his friend’s favor, though Donovan and two former colleagues say they didn’t realize at the time that Milken could profit. The agency’s employees, Donovan says, “were put in a position where they had to compromise the integrity of the process.”
Milken, who was banned from the securities industry for his crimes but is still listed as one of the wealthiest Angelenos with his fingers deep in every crevice of L.A. finance, has plenty of friends at Trump’s White House. Mnuchin, Jared Kushner, and Rudy Giuliani have all lobbied for Milken’s pardon, the Times reports.
Geoffrey Baum, a spokesman for the Milken Institute, says that “to suggest that the work of the Milken Institute is motivated by or connected to Mr. Milken’s investments is flat-out wrong.”
The White House declined to comment on whether Trump is mulling over a pardon for Milken.