A $10 million donation to the School of Law by Lowell Milken will proceed as planned despite controversy

Opposition by a member of the UCLA business law faculty to the naming of a new institute after businessman and alumnus Lowell Milken will not lead to a change in plans, UCLA officials said last week.

The UCLA School of Law announced Milken’s $10 million donation to the UCLA School of Law on Aug. 9, the largest in the school’s history.

A week later, a controversy brewed when an article in The New York Times publicized the objections of business law Professor Lynn A. Stout to the gift.

Stout, a member of the business law faculty who specializes in corporate ethics and regulation, says Milken’s connection to a securities fraud scandal in the late 1980s poses an ethical risk and could hurt the university’s reputation.

Milken was indicted along with his older brother Michael Milken in 1989, during an investigation into the selling of risky, high-yield bonds known as “junk bonds” in Beverly Hills.

Michael Milken received a prison sentence, but the charges were dropped against Lowell Milken a year after the indictment, and no wrongdoing was found by the court.

As part of the court settlement, Lowell Milken agreed to be barred from the securities industry and the New York Stock Exchange. This was the crux of Stout’s concerns in a July 29 letter to UC President Mark Yudof and Chancellor Gene Block, which she reiterated publicly last week.

She said Milken does not serve as a role model for incoming students for that reason, and an institute in his name may hurt the school’s image.

“There has not been, to my knowledge, an open discussion of the ethical implications of naming a business law institute after Lowell Milken,” Stout said.

Her goal has been to make the public aware of Milken’s business background, she said.

But the university says Milken’s background was thoroughly evaluated prior to accepting the gift. Stout’s objections will “absolutely not” change the plans for the donation, said Rachel Moran, dean of the UCLA School of Law. She noted that Lowell Milken has never been convicted of a crime.

“None of what Professor Stout has raised is news to anyone,” Moran said. “It’s very, very old news for us and did not weigh significantly in our deliberations, because we looked at the whole record.”

Former dean Michael Schill first met with Milken in 2008 and asked him to consider a gift of $10 million to endow and name an institute, Moran said.

The donation had since been vetted to business law faculty, including Stout, Moran said. She said Stout had not spoken out until about a month ago.

Milken had already donated a total of about $3 million to UCLA over the years prior to the Aug. 9 announcement, said law school spokeswoman Lauri Gavel. This includes a gift of $100,000 in August 2009 to create the Milken Business Law and Policy Fund.

Part of the funds will support a conference with the Aspen Institute on corporate responsibility next month, which Stout is helping organize.

“That leaves me mystified by her objection,” Moran said.

Stout said she never actively sought out the funds. An email inquiry was sent around asking how the money should be used, and Stout suggested the conference.

She also said she is concerned primarily with the naming of the institute and would not have opposed an anonymous donation.

Stout has had limited public support from fellow business law faculty members. Reactions have been more in line with condemnation, with Professor Kenneth Klee calling it “really unfair” to associate Lowell Milken with his brother’s record.

But others who support the gift also say they have appreciated the discussion generated by Stout’s speaking out. David Ginsburg, the executive director of the law school’s Entertainment and Media Law and Policy Program, said it was fair of Stout to introduce her perspective.

“She spoke from her heart. … I do think she was entitled and should be applauded for doing it,” Ginsburg said.