The $25,000 Question
|At the conference, when I reminded some of the award recipients that Michael Milken was a convicted felon, I was given a look that seemed to say, "Party pooper."|
Then came the fall. In 1989, the government filed a 98-count indictment against both brothers accusing them of violating federal securities and tax laws. All charges against Lowell were dropped as part of a deal in which Michael pleaded guilty to six felonies. He was sentenced to 10 years in prison but served just two after agreeing to testify in other securities trials. Still, Milken remains on probation, and federal authorities continue to investigate whether he violated a 1990 agreement banning him from the securities industry for life.
Former Wall Street Journal reporter James Stewart, in his book Den of Thieves, placed Michael Milken at the center of "the greatest criminal conspiracy the financial world has ever known." His crimes, Stewart wrote, "were far more complex, imaginative, and ambitious than mere insider trading."
But teachers and principals, apparently, are a forgiving bunch. At the conference, when I reminded some of the award recipients that Michael Milken was a convicted felon, I was usually given a look that seemed to say, "Party pooper." None of the awardees I spoke with was troubled by the source of the prize money. If they were, they had found a way to rationalize it away.
"It doesn't bother me in the least," said Robert Leathers.
"I look at the good things he's done, and I look at the impact he's had on research and education," said Joseph Modica, a 6th grade teacher from Hoehne, Colorado. "That's what I'm focusing on. I don't know enough of the other circumstances to really make a judgment call either way."
"My feeling is that he's using the money for an excellent purpose," said David Gillam, a 2nd and 3rd grade teacher from Anchorage, Alaska. "The best thing that I can think of doing is honoring teachers and rewarding people who work really hard."
Another teacher, who asked not to be identified, explained that he was untroubled by Michael Milken's involvement in the awards program because "it's the Milken family that's responsible for this, not one individual."
Other winners professed only vague knowledge of Michael Milken's past. "Why did he go to prison?" one teacher asked me. "Didn't he have his conviction overturned?"
Of all the Milken awardees I interviewed for this article, only one, Nancie Hope Atwell, a 1995 winner, expressed any skepticism about the Milkens' motives. "The awards have been a very effective public relations tool for rehabilitating Michael Milken's reputation," she said in a telephone interview. Atwell, the author of several well-known education books, is principal of the Center for Teaching and Learning, a school she started in Edgecomb, Maine.
Why, then, did she take the money? "Our school is always in the red, so I treated it like a grant to the school. I signed the check over to the school. I guess because of what I did with my money, I have a clean conscience." She elected not to attend the conference in California. "I had other professional obligations," she told me.
When I repeated Atwell's comments to Lowell Milken, his ever-present smile disappeared. "My response to that," he said, "is very simple: Everyone in America is entitled to their own opinion." Asked to elaborate, he replied: "I don't really know what more to say. I find the comment to be incorrect, but I don't spend my life trying to chase incorrect statements with the truth. I am really too busy a person."
At least one state, New York, does not participate in the Milken Educator Awards because of Michael Milken's involvement. The New York Board of Regents and the state commissioner of education, with support from New York State United Teachers, turned the Milkens down eight years ago. "That exemplary teachers could be proud of this [award] and go back to their classrooms saying, 'I got all this money from Michael Milken,' that raises some questions," Chuck Santelli, the union's director of policy and program development, said at the time.
|Defenders of the Milkens point out that the brothers established the awards program before the investigations.|
But other states can't wait to join. In Los Angeles, I met Robert Bedford, Florida's deputy commissioner for education programs, who was invited to the conference even though his state does not yet take part in the awards. "We're looking at them, and they're looking at us," he said. "We'd love to be part of it. We hope the foundation is impressed by us." Representatives from several other states were also at the conference, eager to make their pitches.
New York notwithstanding, Lowell Milken hopes eventually to sign up all 50 states and the District of Columbia. "That would be the long-range goal," he said.
Even if Michael Milken did become a philanthropist for less than altruistic reasons, he would hardly be the first wealthy individual to see the image-building benefits of giving away large sums of money. Andrew Carnegie, the steel magnate, was despised by many Americans after the infamous Homestead Strike of 1892, during which 16 men were killed. Yet he gave away millions of dollars to establish more than 2,500 libraries in the United States, and he contributed generously to public education. His philanthropies—including the Carnegie Corporation of New York, the Carnegie Endowment for International Peace, and the Carnegie Foundation for the Advancement of Teaching—have taken on identities of their own. Today, when you mention the name Carnegie, the first thing most people think of is Carnegie Hall; the Homestead Strike is all but forgotten.
Legend has it that Ivy Lee, the inventor of modern public relations, persuaded client John D. Rockefeller, an oil mogul and cutthroat capitalist, to carry a roll of dimes and hand them out to children to polish his image.
Defenders of the Milkens point out that the brothers established the awards program, as well as other charitable endeavors, before Michael Milken came under investigation by the Securities and Exchange Commission. That's true, but it's also true that the awards were first given out in 1987, the same year the clouds began to gather over the Milken empire.
Then there's the question of whether the Milken Family Foundation's assets—worth more than $300 million—are somehow tainted because of Michael Milken's illegal activities. Author Benjamin Stein thinks so. In his 1992 book A License To Steal: The Untold Story of Michael Milken and the Conspiracy To Bilk the Nation, he writes, "Money from the Milken family foundations, clearly traceable to large-scale misconduct by Michael Milken, is sought by worthy causes all over Southern California, from orphanages to operas." Others have pointed out that even though Milken paid more than $1 billion in fines and settlements as part of his plea bargain, he and his family, including his brother, were allowed to keep an estimated $500 million. (James Stewart estimates the Milken family fortune to be even greater, perhaps as much as $1.2 billion.) In other words, this line of thinking goes, Milken got off easy.
There's no denying, however, that the Milkens are doing positive things with their money. In addition to the National Educator Awards, the Milken Family Foundation has established a number of charitable programs. There's Mike's Math Club, an enrichment program for 5th and 6th grade students. There's the Association for the Cure of Cancer of the Prostate, or CaP CURE, founded by Michael Milken in 1993, when he was diagnosed with prostate cancer. (His disease is now in remission.) There's the Milken Exchange on Education Technology, which supports the use of technology in elementary and secondary schools. The exchange underwrote "Technology Counts," a report on technology in schools released this past fall by Education Week, which, along with Teacher Magazine, is published by Editorial Projects in Education Inc.
The goal of the foundation, according to a mission statement, is "to discover and advance inventive and effective ways of helping people help themselves and those around them lead productive and satisfying lives."
|The man is giving away a lot of money—who cares what his motives are?|
The Milken name certainly hasn't prevented the foundation from adding some heavy hitters to its roster. Thomas Boysen, senior vice president in charge of education, was Kentucky's commissioner of education from 1991 to 1995; he helped implement the state's landmark education reforms. Lewis Solmon, a senior scholar and senior vice president, is the former dean of UCLA's graduate school of education. Cheryl Lemke, the foundation's vice president in charge of education technology, previously served as associate superintendent for learning technologies for the Illinois state board of education. Former football star Rosey Grier sits on the board of directors and also serves as program administrator for community affairs. Last year, the Milkens snagged Donald Straszheim, chief economist at Merrill Lynch, to become president of the Milken Institute.
In the end, perhaps it really doesn't matter that Michael Milken is a convicted felon or that his intentions are somehow suspect. The man is giving away a lot of money—who cares what his motives are?
Waldemar Nielsen, author of Inside American Philanthropy: The Dramas of Donorship, pointed out that "a number of the largest fortunes in the United States were gathered under conditions that can be criticized." But the important thing, he said, is what the person is doing with his money now. "Look at the facts," he told me. "Is he generous? Is he purposeful? And is he intelligently purposeful? Is it real generosity? Or is it just a little amount of money designed to get his name in the papers? If he's willing to be generous, he should be applauded. God knows, there are plenty of rich people out there who don't do a goddamn thing with their money."
In other words, judge the philanthropist by the philanthropy.
If the Milken Family Foundation National Education Conference makes one thing clear, it is this: Michael Milken is determined to rehabilitate his public image. Once a symbol of all that was wrong about the "decade of greed," the former junk bond king has repositioned himself as a major philanthropist. When he shows up on Charlie Rose's PBS talk show to discuss prostate cancer and CaP CURE, his status as a convicted felon is never mentioned. But others won't let him forget it.
"Milken," according to a 1996 Los Angeles Times article, "has thrown himself into his community service and charity work with the same zeal he once directed at junk bonds. Yet he remains recalcitrant when it comes to his criminal record, portraying himself as a misunderstood visionary who will one day be vindicated in the court of public opinion."
In 1996, when Fortune magazine ran a cover story on Milken's return to the public eye ("Milken's Back" proclaimed the cover), Steven Rattner, managing director of Lazard Freres, a Wall Street investment firm, sent a letter offering this appraisal: "Michael Milken's efforts to rehabilitate his image should be kept firmly in context. It is absolutely true that Milken is a financial genius who should receive full credit for inventing the high-yield bond, the most important financing tool of modern times, which has allowed thousands of small companies to grow and create jobs. It is also true that Milken is a convicted felon who pleaded guilty to relatively minor infractions to avoid facing far worse punishment. . . . It should also be remembered that Milken's overzealousness caused billions of dollars of unsound paper to be stuffed into S&Ls, insurance companies, and other financial institutions, resulting in the most expensive string of failures since the Depression."
Milken declined to be interviewed for this article. To other reporters, he has referred only obliquely to his past misdeeds, referring to them as "my problems from the '80s." In the Milken Family Foundation press kit, there's no mention of Milken's fall from grace, nor even a reference to his high-flying days at Drexel Burnham Lambert. Instead, there's this vague sentence: "Over the last generation Mr. Milken was instrumental in financing hundreds of companies and creating millions of jobs around the world in industries ranging from cable and telecommunications to home-building and health care."