How a Book Flap Became a Classic : * Litigation: Michael Milken's Harvard lawyer goes after the Pulitzer Prize-winning author of a critical portrayal of his client.

By ANGELLA JOHNSON

Oct. 25, 1991 12 AM PT

SPECIAL TO THE TIMES

Once upon a time in the ‘80s, a small group of men made billions of dollars by breaking the rules, leaving Wall Street awash in scandal when they were caught.

Then in the ‘90s, a Pulitzer Prize-winning journalist decided to write a book telling their story of greed, insider dealings and other shenanigans.

Not necessarily a best seller, you might think. But read on.

Onto the scene steps a publicity-inclined Harvard University law professor determined to discredit the book--and help free one of the men convicted--with his own allegations of deceit and trickery.

All this, serendipitously, helps the book jump to No. 2 on the New York Times best-seller list.

This is no fictional pot-boiler. James B. Stewart’s “Den of Thieves” is selling like “hot cakes” thanks to the controversy, according to Ed Conklin at Dutton’s book store in Brentwood, where more than 150 copies have moved the past two weeks.

Publisher Simon & Schuster says the book has sold more than 200,000 copies in less than a month and is in its fifth print run.

All this matters not one jot to Alan Dershowitz, the flamboyant lawyer who has orchestrated a blistering press attack on Stewart, the Page One editor of the Wall Street Journal. Dershowitz says “Den of Thieves” is an act of character assassination against his client, fallen junk bond star Michael Milken.

Milken, who is serving a 10-year jail term in Pleasanton federal prison near San Francisco for his part in Wall Street’s most massive financial swindle, has hired the $400-an-hour lawyer to help change his image and get him out.

Dershowitz, renowned for both his innovative legal and self-promotional skills, has turned himself into a household name by representing celebrities such as Leona Helmsley and Claus von Bulow.

He said part of his strategy to help reduce Milken’s sentence is to launch a media campaign to clear the name of the former Drexel Burnham Lambert bondmeister.

“It doesn’t matter if it helps to sell more copies of ‘Den of Thieves,’ ” Dershowitz said. “We don’t care about that as long as people don’t believe it.”

For months now, Dershowitz has been arguing that his client is the victim of an anti-Semitic smear campaign. Two weeks ago, he personally paid nearly $45,000 for a full-page ad in the New York Times condemning the paper for a favorable review of “Den of Thieves” by Michael Thomas.

Thomas writes The Midas Watch, a column that skewers business-world corruption in the New York Observer, a weekly newspaper. In a New York Times review of his 1989 novel “Hanover Place,” he was accused by Judith Martin (best known for her “Miss Manners” column) of indulging in anti-Semitism.

It is primarily on this basis that Dershowitz has argued that Thomas was the wrong person to review Stewart’s book. Thomas, whose wife is Jewish, disagrees.

“It’s ridiculous,” he said Thursday. “Dershowitz is merely applying a strategy of smear to detract from the merits of the issues surrounding his client’s crimes.”

But the tenacious lawyer plans to continue his line of attack in a series of expensive newspaper advertisements--at Milken’s expense--that challenge alleged discrepancies in the book. The latest appeared on a half-page in the Los Angeles Times this week, under the headline: “The paid ad the Wall Street Journal refused to run.”

A Journal spokesman, declining to elaborate, said the ad was rejected because it was considered inappropriate.

Stewart, who was unavailable for comment, has defended his book on numerous occasions. He told Reuters: “I spent enormous amounts of time researching it and ensuring its accuracy. I’m confident it will withstand any sort of campaign they choose to mount against it.”

Some more cynical observers have commented that Dershowitz may also be trying to boost sales of his own autobiography, “Chutzpah” (the Yiddish word for nerve or boldness ) . The attorney insists that his campaign is merely an attempt to set the record straight by persuading the public that Milken was not responsible for the “greed decade,” as the book implies.

“This is a long-term effort to make sure the verdict of history is truthful. The story, as put by Stewart, is false--nothing more than recycled garbage which deserves a public rebuttal,” Dershowitz declared this week.

In the Reuters interview, Stewart said he found it hard to understand how the ads could help Milken. “Paid ads from the highly paid lawyer of Michael Milken I don’t think have any inherent credibility,” he said.

Although the ads contend that the book is inaccurate and accuse Stewart and others of being anti-Semitic, “Den of Thieves” is thriving in the public glare.

“No publicity is bad publicity,” said Calvin Reid, associate news editor of Publishers Weekly. “I’m sure this will only cause sales to shoot up higher.”

Reid said the ads will likely also help sales of “Chutzpah,” No. 11 on the New York Times nonfiction best-seller list.

Meanwhile, the book’s epilogue notes, Milken continues to languish in prison; if his sentence is not trimmed, he is not expected to be considered for parole until March, 1993.