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EmailBy Steven Mintz on September 9, 2011
When UCLA announced a $10 million gift from Lowell Milken to establish a business law institute in his name, last month, the university described him as a “pioneer in education reform” and a “leading philanthropist.”
Many faculty have welcomed the gift at a time when state funds have been drastically reduced to fund hiring education in California. Still others criticize the university for accepting the gift from a donor who escaped possible conviction on securities fraud charges because his brother Michael, once known as the junk bond king, reached a plea bargain agreement with prosecutors.
Let’s begin with a brief history lesson. Michael Milken was a pioneer in the development of the market for high-yield bonds that became known as junk bonds during the 1970s and 1980s.
He was indicted on 98 counts of racketeering and securities fraud in 1989 as the result of an insider trading investigation. He pled guilty to six securities and reporting violations but was never convicted of racketeering or insider trading. Michael Milken was sentenced to 10 years in prison and permanently barred from the securities industry by the Securities and Exchange Commission.
The presiding judge reduced his sentence for cooperating with testimony against his former colleagues and good behavior; he was released after less than two years.
His brother Lowell, who worked alongside Michael, was never charged, due to his brother’s plea deal.
The Milken critics point to the brothers as symbols of Wall Street greed during the 1980s. Supporters point to their philanthropic activities since that time. They founded the Milken Family Foundation and philanthropies funding research into melanoma, cancer and other life-threatening diseases.
One of UCLA’s top business law professors, Lynn Stout, criticizes the gift because it threatens the reputation of the institution. She is quoted in a New York Times article as having written the following to the president and chancellor of UCLA: “The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business.”
My one criticism of Stout’s position, based on the quote, is the personalization of her position. It will damage her personal and professional reputation. I imagine she extends the argument to harming that of UCLA as well.
Proponents of the gift point to the need for funds to support faculty activities at a time of severe budget cuts, but the bulk of the funds are targeted for a business law institute in his name.
The Milken family generated controversy at UCLA in 1984 after the university severed its ties with an education company controlled by Michael Milken that planned to sell videotapes of a lecture series he gave at the school. The company agreed to remove any identification of UCLA from the tapes after the school said it received many complaints from state officials.
Precedents exist for a major university to refuse gifts from corporate wrongdoers like the Milkens. In the 1980s, Princeton returned money from Ivan Boesky to build a Jewish Center after the government charged the Wall Street financier with insider trading crimes. Seton Hall removed the name of L. Dennis Kozlowski from an academic building in 2005, after the conviction of the former Tyco chief executive for looting his company.
My opinion is UCLA has sold its soul in accepting a gift in Lowell Milken’s name.
The thinly veiled message is that convicted felons can benefit from such crimes simply by having their unconvicted business partners donate enough money to make the recipient overlook the offenses. In accepting the largest single gift in the University’s history, the UCLA School of Law stated it will enable “the law school to meet and exceed its ambitious $100 million fundraising goal well ahead of its original five-year schedule.”
I suppose UCLA then believes the ends justify the means.
• Steve Mintz is a professor of accounting in the Orfalea College of Business at Cal Poly San Luis Obispo. He blogs about business issues at www.ethicssage.com and www.workplaceethicsadvice.com. Contact him at smintz@calpoly.edu.
Dennis Kozlowski requested that Seton Hall remove his name, not the other way around.
[…] UCLA has accepted a $10 million gift from Lowell Milken to establish a business law institute in his name. […]
I appreciate the spirited reaction to my opinion piece on the Lowell Milken gift to UCLA. It is an undisputed fact that the brothers Milken were banished for life from working in the securities industry as part of a settlement with the Securities and Exchange Commission in March 1991 and barred from membership on the NYSE and from employment or association with any NYSE member or member organization. I agree that people can change and his brother Michael was the guilty party as the “Junk Bond King.” However, I do object to UCLA’s allowing the gift to be used to create a Lowell Milken Institute for Business Law and Policy. It seems ironic to me to name such an institute given the securities industry settlement.
It appears the only selling related to this donation, is Lynn Stout trying to sell her book.
I’m sure that at the UCLA conference this month she will also try to sell her book and make some nasty remarks about Lowell Milken who’s very money is being used to fund the conference.
One professor’s complaint, which as pointed out in the article was personal and did not reflect the institutional perspective, does not merit continued attention. Lowell Milken is a pioneer in education reform and has committed his life to improving opportunities for all students — pre-K through higher education. The strength of UCLA’s soul is evident by the acceptance and appreciation of such a generous gift by Mr. Milken.
Mr Mintz, you need to do some research instead of regurgitating slanderous remarks from the liberal press.
Mr Milken was a pawn in his brother’s case, not a criminal.
Mr Milken had and has a sterling reputation, and has always been a philanthropist, before and after American politicians used the Milkens to make their reputations (Guilliani then ran for mayor of New York!).
Prof Stout is trying to sell a book – as you noticed, it is her reputation that she is worried about. My guess is the the book cannot sell on its own merit.
UCLA recognizes a great and loyal supporter and alumnus, there is no selling of soul here!
Professor Mintz should get his facts straight and avoid creative accounting.
• Lowell Milken was never found guilty of any charges –not due to any plea bargain but because he was innocent. After one of the most intensive securities investigations in history, all charges against Lowell were dropped. It was widely reported that Lowell’s indictment was a ploy to pressure his brother and nothing has come to light in 25 years to disprove this assertion.
• Lowell Milken’s philanthropic work began early in his life. In fact, the Milken Family Foundation was co-founded by Lowell and Michael to formalize their already vigorous efforts back in 1982, preceding later legal difficulties.
• Professor Lynn Stout has knowingly and willingly accepted funding by Lowell Milken to the UCLA Law School in the past. Indeed, such funds will be used for a conference she is leading this month. Furthermore, Lowell has a long record of giving to his alma mater and was honored with UCLA School of Law’s Alumnus of the Year Award for Public Service in 2009.
Great going UCLA. You will do anything for money even take it from non convicted criminals who slip thru our at sometimes lousy Justice System. Pretty sad.
This article contains so many contradictions. Lowell Milken has never been convicted of any crime ever. He has been a philanthropist for almost thirty years, given almost 100 million dollars to education and medical research. UCLA is doing nothing but accepting a gift that will benefit its students for decades to come. Isn’t that what our universities are supposed to do? It seems odd to me that the one professor questioning the gift has been reported to have knowingly used funds from Lowell Milken for her own professional pursuits. Bravo to UCLA for standing behind him and not giving in to a sensationalized smear campaign.