Tyco Executives Convicted In New York

by Glen Shapiro, LawAndTax-News.com, New York

20 June 2005

Former Tyco chief executive, Dennis Kozlowski and former chief financial officer, Mark Swartz were found guilty last week on 22 of 23 counts, including grand larceny, conspiracy, securities fraud and falsifying business records.

The two were said to have received more than $150 million in unauthorized loans and bonuses from Bermuda-based Tyco. The New York state jury took 11 days to bring in guilty verdicts against Mr. Kozlowski, 58, and Mark H. Swartz, 44.

Jurors said afterwards that they had looked hard for evidence to support the defendants' claims that their remuneration was authorized, but "it simply wasn't there". Justice Michael Obus set sentencing for August 2. Although gaol terms of up to 30 years are possible, much shorter terms are expected. Attorneys for both men said they would appeal.

Manhattan District Attorney Robert M. Morgenthau was triumphant, after some recent failures for white-collar prosecutors, saying: "Crimes committed in corporate offices will be treated according to the same standards as other crimes," he said. "No one is above the law."

This was a re-trial: the previous trial collapsed after six months when a juror who had been named by the media received a threatening letter. In the re-trial, the prosecution abandoned a charge of enterprise corruption, and focused less on the 'perks' and extravagant lifestyle afforded to Kozlowski and Swartz by the money which they siphoned off from Tyco.

The case centered on whether the defendants had received board approval for a series of multimillion dollar payments and loan write-offs between 1999 and 2001. Jurors seem to have been underwhelmed by evidence from the two men in which they claimed they had been given verbal approval for the payments and had not noticed their omission from tax returns.

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