Tyco Launches Lawsuit Against Former CFO

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

04 April 2003

Bermuda-based manufacturing and services company, Tyco International on Wednesday filed a $400 million lawsuit against its former chief financial officer, Mark Swartz, accusing him of fraud, breach of fiduciary duty, unjust enrichment, and various other forms of misconduct.

According to the suit, which was filed in Manhattan's Federal Court, Mr Swarz 'improperly took Tyco funds and assets personally, and aided, abetted, and facilitated the misappropriation of Tyco Funds and assets by others.'

Among the perks thought to have been secured at the company's expense by Swarz prior to his departure last summer are private tuition for his children, basketball and concert tickets worth $123,222 and $1,140 respectively, a helicopter ride for his wife costing $6,028, and air travel on company planes worth around $1.3 million.

Mr Swarz also stands accused of making improper use of relocation and executive loans, changing a clause in his employment contract and thereby multiplying its value tenfold to $100 million, and undertaking fraudulent stock sales.

Tyco announced that it had decided to file the suit because its former CFO had refused to participate in arbitration proceedings launched against him last year.

However, in a statement released this week, Mr Swartz's lawyer, Charles Stillman condemned the complaint as a 'publicity stunt' on Tyco's part, and explained that his client had not participated in the arbitration due to an ongoing criminal investigation, due to go to trial in September.

'As we have previously communicated to Tyco, we believe the appropriate time for such an arbitration is following the conclusion of the criminal case. There is no fair reason for Tyco to commence this court action now.'

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