Thread by @nimkef

23 Oct 1990

A lawyer who advised the Drexel Burnham Lambert junk bond department on the legality of transactions testified Monday that information about improper or illegal activity was withheld from him.

latimes.com/archives/la-xp…

The lawyer, Craig Cogut, said however that the information was withheld by Michael Milken’s brother, Lowell. Cogut said he never discussed the questionable transactions, involving Storer Communications warrants, with Milken.

The hearings are being held to help U.S. District Judge Kimba M. Wood determine if Milken committed more than the six felonies he pleaded guilty to in April. The judge will take the evidence into account when she decides Milken’s sentence, which could be up to 28 years in prison.

Cogut disclosed Ray R. Irani, Pres of Occidental Petroleum, was permitted to buy some of the Storer warrants, not available to the public. They were sold for about $0.09 each to fund managers and others. The lucky investors later received $4.88 per warrant, a profit of 5000+%

Occidental was an important Drexel client and sold several bond issues through Drexel. However, sources said that Occidental wasn’t among the companies that bought Storer preferred. Neither prosecutors nor Cogut indicated that there was anything improper about Irani’s investment.

But they also didn’t make clear why Irani was permitted to buy the warrants.

Cogut also disclosed that Thomas Spiegel, the former chief executive of troubled Beverly Hills-based Columbia Savings & Loan, was allowed to buy some of the warrants through a personal partnership.

Asked about the handling of the Storer warrants by Drexel, Cogut said he would have intervened to change the SEC filings or stop the transactions involving the warrants if he had known what was actually going on.

He said Lowell Milken deceived him by telling him that the warrants were being used as stated in the SEC filing. Cogut also said he asked if the warrants had been offered directly to the funds or corporations that bought Storer preferred stock, rather than to execs personally

He said Lowell told him that they had been offered to both. Cogut said he later learned that this wasn’t true.

Cogut himself was a member of the Drexel partnerships that received the warrants.

20 Aug 2001

Leon Black, who put together the takeover of Executive Life and its junk-bond portfolio, has claimed to be "amazed" & "shocked" that ownership of Aurora may have been parked with temporary buyers who were acting on behalf of Crédit Lyonnais.

forbes.com/2001/08/20/018…

But a letter dated 4 Jan 1993, from Craig Cogut, one of Black's key lieutenants, to Garamendi's deputy, Richard Baum, suggests that Black may have known that Francois Pinault had acquired the Aurora option--from Crédit Lyonnais, less than two weeks before:

"Also, after the holidays," Cogut wrote, "we will be reviewing the status of the investor group. As we have discussed, several changes are likely to occur ... I will discuss with you how best to begin the approval processes for substitute investors we have discussed."

Did Leon Black know in 1993 that the real buyers of Aurora, the old Executive Life, were Crédit Lyonnais and Pinault? It certainly looks as if he did.

Markings on this internal government memo indicate that somebody at the insurance department faxed it to "Akin Gump--Apollo Advisors." Akin, Gump, Strauss, Hauer & Feld, in DC, is one of the U.S.' most influential law firms; its clients included Leon Black and his Apollo funds.