Scandals / Wall Street

Bruck, Connie. The Predators' Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders. New York: Penguin Books, 1989. 399 pages.

This book, originally published in 1988 by Simon and Schuster, was the first to blow the whistle on Michael Milken. Connie Bruck, a staff writer for the New York Times, worked on it for two and a half years, and interviewed almost 300 people. Fred Joseph, CEO at Drexel, agreed to cooperate with Bruck in February, 1986 -- a time when the business press universally admired Drexel for their ability to turn junk into gold. Drexel felt unassailable, and for months Bruck kept scribbling while they kept bragging. Then in November, 1986, Ivan Boesky pleaded guilty to insider trading and Drexel circled their wagons. Milken offered Bruck $250,000 not to publish the book, while Milken's attorney Arthur Liman (remember Iran-contra?) obtained a copy of the manuscript despite Simon and Schuster's security precautions, and planned an all-out counterattack with the help of Linda Robinson and her PR firm.

Bruck says that when she started this book, her sympathies were more with Milken than with the corporate establishment that Milken was attacking. It was her willingness to be driven by the evidence that caused Jason McManus, Time Inc.'s editor in chief, to regard this book as "the finest piece of business investigative journalism since the turn-of-the-century muckrakers, Lincoln Steffens and Upton Sinclair."


Copetas, A. Craig. Metal Men: Marc Rich and the 10-Billion-Dollar Scam. New York: Harper & Row (Perennial Library), 1986. 224 pages.

Marc Rich started as a "metal man," a specialized form of commodity trading that deals in mineral resources. Of the eighty natural metals in the earth, forty are of industrial importance, and are bought and sold on the open market by traders. Innocent investors speculate on price fluctuations, while the metal men -- known for their wheeling and dealing -- might bribe foreign officials, start market rumors, or play tricks on other traders. Marc Rich did all of the above and more, and made $10 billion in the process. He started in 1954 at Philipp Brothers Trading, and by the 1970s was making huge profits for them by venturing into the spot oil market. At the end of 1973 he and Pincus (Pinky) Green left to form their own empire. They hired away some of Philipp Brothers' more aggressive traders -- the young high- rollers who thrived on cocaine and casual sex in the fast lane. Operating from New York, London, and Switzerland, Rich was in a league where one country is played off against another, with shadowy deals washed through Panamanian shell companies and dripped into off-shore banks. In the early 1980s, the U.S. went after Rich for tax evasion and oil-pricing scams. But as of 1994, he was living comfortably in Zug, Switzerland, where he is so important to the local economy that the Swiss legal system still refuses to extradite him.

Stein, Benjamin J. A License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation. New York: Simon & Schuster, 1992. 221 pages.

Benjamin J. Stein's coverage of Michael Milken and Drexel was the first to reveal the extent of the junk bond problem. By the time this book was published, Milken was nearly out of jail -- his expensive lawyers had already convinced the judge to lessen his sentence from ten years to two years. Stein began noticing Milken and Drexel in the mid-1980s, received a death threat from a Drexel hotshot in 1988, and was trashed a few years later in a book by Jesse Kornbluth -- a biography arranged by Milken's publicist Ken Lerer that claimed Milken wasn't really interested in money.

Stein is a lawyer, an economist who knows finance, a good writer, and someone who has a social ethic that goes beyond private profiteering. He might be the only such person in America who can get an occasional book published. He compares Milkenism to organized crime in its "use of underworld tactics of the con and the shakedown, the swindle and the heist, in the world of finance on a national and international scale." If the gruff, cagey Mafia hoods who testified at the Kefauver hearings in 1950 had been slick enough to work in "legitimate" business instead of street-corner gambling and loan-sharking, how much more money would they have been able to make? "Now we know," writes Stein. (page 187)


Stewart, James B. Den of Thieves. New York: Simon & Schuster, 1991. 494 pages.

In the early 1960s, students at UC Berkeley spent their summers registering black voters in the south; in 1964 they started the Free Speech Movement and in 1969 it was People's Park. But in 1986 Berkeley seniors voted to invite Ivan Boesky to speak at their commencement. Boesky, who had never been to college, looked up from his text and said, "Greed is all right, by the way. I want you to know that. I think that greed is healthy. You can be greedy and still feel good about yourself." The students broke into spontaneous applause.

Boesky, at the time worth $130 million, was convicted of insider trading. He helped finger Michael Milken, who was worth $700 million when he was released from prison after serving two years of a ten-year sentence. Meanwhile the 1986 class is having trouble finding jobs, and when it comes time for them to invest in their children's education, a good portion of their income will still be paying for the S & L deficit -- which was partially caused by Milken's junk-bond trading. It all fits.

Den of Thieves is basically a biography of Boesky, Milken, Dennis Levine, and Martin Siegel -- all convicted for Wall Street crimes. Author James Stewart, an editor at the Wall Street Journal, makes Oliver Stone look like he was guilty of understatement in his movie "Wall Street."


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