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Milken's Unpardonable Redwood Felonies



Some crimes cannot be forgiven. There's Harvey Weinstein's sexual assaults, the Sackler family's (alleged) opioid proliferation and, for Humboldt County, Michael Milken's junk bonds.

So when President Trump pardoned "Junk Bond King" Milken for his criminal offenses last week, the message to Humboldt was clear: No matter how many ancient forests you plunder, it's an admirable undertaking — as long as it makes money.

Milken's felonious financing was a primary cause for Maxxam's massive clearcutting of big redwoods in the 1980s. Maxxam used Milken's junk bonds to leverage a hostile takeover of Pacific Lumber Co. But junk bonds have huge interest rates because they're deemed risky investments and the exhausting interest on those takeover bonds was repaid with the hard currency of ancient trees.

When Milken started using investment bank Drexel Burnham Lambert to create the financial underpinnings for forest destruction, Humboldt was already reeling from nearly a decade of Enviro v. Logger politics. The attitude toward forests was tearing apart the social fabric of Humboldt County at the time. It was a one-industry economy, logging, and it was tanking. Jobs were scarce. The community grew polarized. The factions got violent. It got bloody. Entire watersheds were denuded.

Enviromentalists were in fist fights with loggers in Eureka's streets. The timber industry, backed by Humboldt State University and the Times-Standard, was promoting giant clearcuts. In the name of "silviculture," clearcuts were followed by dropping napalm for controlled burns after logging, then helicopters spraying the components of Agent Orange – 2,4,5-T (until it was banned) and 2,4-D. The herbicides' aim was to kill all wide-leaved vegetation before it could compete with the next softwood cash crop.

Humboldt's reality in the early 1980s sounds like the plot to a horror film or perhaps, an insufferable documentary. But that wasn't bad enough. No, Michael Milken's junk bonds entered the scene and made it much, much worse.

Until Milken premiered his rapacious financing scheme in Humboldt, junk bonds had been a finance mechanism of last resort. His criminal actions changed the industry to parlay those bonds into huge investment opportunities and enormous profits. Through the investment firm Drexel Burnham Lambert, Milken's junk bonds were specifically channeled by the newly formed Maxxam corporation to Pacific Lumber's 1985-1986 takeover. Until then, Pacific Lumber was a family-run business that cut and milled redwoods in relative sustainability.

As a result of Milken's maneuvering, vast swaths of ancient trees were clearcut in order to pay off debt. To service junk bonds' enormous interest rate, Maxxam immediately doubled or tripled (depending on which data to believe) Pacific Lumber's previous rate of cutting down ancient forests. For those of you who can translate, that was 285 million board feet a year to pay off $900 million in debt, with much of that in Milken's junk bonds.

Repaying the enormous interest rates on Milken's junk bonds led to the devastating of entire watersheds. Ancient redwoods, once cut and milled, could wholesale for $100,000. And that, according to the former chief executive officer of Maxxam, Charles Hurwitz, was the reason behind Pacific Lumber's acquisition.

After Maxxam started paying off Milken's junk bonds with ancient forests, tree-sitters moved in to offer redwoods their personal protection. Julia Butterfly Hill was the most well known but forests were secretly scattered with dozens like her. Conflict escalated with the deaths of forests activists like Judi Bari (car bomb) and David Gypsy Chain (felled tree).

"It led to many years of timber wars," Sharon Duggan, the Environmental Protection and Resource Center's attorney during that time, said in retrospect.

While "wars" is military glib, those facing down a phalanx of Milken-financed Maxxam D9 Caterpillars could understandably describe it as one.

The "wars" only lasted a few years before the trees, and their profitability, were plundered and Humboldt reeled. The rapacious harvesting left Humboldt's economy a wreck. Maxxam was facing bankruptcy. Milken and his ilk started being picked off by prosecutors for violations of all sorts of financials laws enforced, at the time, by the federal government. Humboldt's tree-sitters wobbled back to earth.

It was 1990 when Milken pleaded guilty to six felonies. That was on the heels of the federal government's 1988 takeover of Maxxam, at a cost of $1.6 billion. (A resulting deal created the Headwaters Forest Reserve.) To round off the failures surrounding Milken, illegal activities forced Drexel Burnham Lambert, Milken's junk bond bank, into bankruptcy in 1990.

Milken suffered just a little for the criminal behavior. Trump's pardon last week wasn't necessary to get him out of prison — he's been out for a long time. He only served two years of a 10-year sentence for his criminal activities surrounding junk bonds. He is still a wheeler-dealer, hosting international conferences for capitalists. He's the kind of man who networks openly at the World Economic Forum in Davos, Switzerland. His net worth was $3.8 billion as of the day of his pardon, according to Forbes.

When the White House announced Milken's pardon, it defended him as "one of America's greatest financiers. [He] pioneered the use of high-yield bonds in corporate finance. His innovative work greatly expanded access to capital for emerging companies."

J.A. Savage witnessed forest destruction as USFS Six Rivers post-clearcut crewmember, a forest firefighter and an Los Angeles Times stringer. She prefers she/her pronouns.

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