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In the Shadow of the '80s : Yesterday's High Rollers Struggle in a New Era of Sobriety

AFTER THE FALL: California Digs Out From the Great Slump. One in an occasional series


Like other scoundrels caught red-handed, convicted con man Barry Minkow says he has renounced crime and found Jesus--and he's banking on his dramatic conversion from Judaism to make a comeback.

Sentenced to 25 years in prison in connection with one of the largest Wall Street scams ever, the founder of the ZZZZ Best carpet-cleaning company in the San Fernando Valley may be paroled from federal prison as early as next July, after serving about a third of his term.

He'll be only 29 and ready for a new career in the public eye: writing and talking about past errors and his redemption through religion. Eventually, he says, he hopes to repay his victims.

Thus are the deeds and misdeeds of the glitzy 1980s transmogrified in the 1990s, as the high rollers of yesteryear struggle to survive in a new era of sobriety. Long gone are the myriad tax shelters, rocketing property values and swelling securities markets that marked the 1980s as a time of easy money unprecedented in American history.

The contrast is especially stark in California, which suffered through the worst recession in the nation following unparalleled real estate inflation. It is here that one easily finds those whose careers symbolized the successes and excesses of the time--and those who now are coping with the decade after.

Legitimate business executives became overextended and endured painful retrenchments. Others started out as legitimate businessmen and became involved in increasingly questionable activities that eventually landed them in trouble. A few seemed headed for trouble from the outset.

Terren Peizer was a financial prodigy who became rich while still in his 20s, working for Michael Milken's marvelous money machine, as Forbes magazine once dubbed Drexel Burnham Lambert's junk bond operation in Beverly Hills.

Thomas Spiegel was a controversial trailblazer in the highly uncertain world of banking deregulation. His relatives were majority shareholders in Beverly Hills-based Columbia Savings, once the fastest-growing thrift in the country.

John Peter Galanis was the ultimate promoter in the golden era of tax shelters. Even then, though, Galanis went about his business largely behind the scenes, because of a previous conviction for securities fraud.

Where are they today?

Peizer is quietly prospering, having distanced himself from Milken and Drexel following his testimony about some of the worst financial excesses of the period.

Spiegel will soon face charges that he looted Columbia Savings & Loan, whose failure could ultimately cost taxpayers more than $1 billion. He says he is innocent.

Galanis is back in jail, with little chance of parole any time in the 20th Century.


Terren Peizer would just as soon let go of his past, when he literally worked at Milken's elbow on the legendary black, X-shaped trading desk from which Milken oversaw his financial empire. From there, Peizer had a ringside seat to a financial circus of junk bonds and debt-financed mergers and acquisitions.

When law enforcement officials cracked down on Drexel, Peizer agreed to testify against Milken in exchange for immunity. In the process, he earned the reputation as "the man who ratted out Mike Milken."

Peizer denies he gave up Milken to save himself. For one thing, he says, he did nothing illegal. For another, he notes that he was only one of several witnesses who cooperated with prosecutors.

Now a private investor, Peizer still lives in the condo he bought nine years ago, when he came West to sit at Milken's left hand.

Peizer was brought on to handle the account of money manager David Solomon's firm, a major customer of Drexel junk bonds. He was entrusted with the blue notebook that detailed the deals between Solomon, Milken and a junk bond mutual fund called the Finsbury Fund.

The transactions included generating false commissions, inflating the prices of bonds and creating phony tax losses for Solomon, wrote author James B. Stewart in his best-selling book, "Den of Thieves." Details of the transactions are contained in court documents in the Milken case and in Peizer's testimony.

Peizer says today that he was unaware of the nature of the transactions or their legality: "I didn't really know why we were doing (any of it). I didn't have all the information."

As law enforcement officials closed in, Peizer relinquished control of the blue notebook at Milken's request. But he says he kept copies of other critical Drexel documents, which helped form the basis of a deal to testify against Milken in exchange for immunity.

After being indicted on 98 counts of securities violations, Milken ultimately pleaded guilty in 1990 to six felony charges, including manipulating stock prices, and served two years in prison. (Through a spokeswoman, Milken declined to comment for this article.)

For his part, Peizer has fared well since that time. Now 34, he manages his own investments through a private holding company, Beachwood Financial, named after his hometown in Ohio.

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