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Art Dealer Testifies in Kozlowski Case

Jan 21, 2004 | AP

L. Dennis Kozlowski, Tyco International Ltd.'s ex-chairman and chief executive, and his wife Karen bought millions of dollars of paintings for their Manhattan apartment in 2001, an art dealer testified.

Christine Berry, a former art dealer in New York for Fine Collections Management of West Palm Beach, Fla., said the Kozlowskis purchased through her $14 million of artwork on three occasions in 2001, including oil paintings by Renoir and Monet. In each case, an invoice for the artwork was sent to Tyco's office in New Hampshire, she said.

However, Kozlowski in February 2002 — a few months after purchasing the Monet and Renoir asked her to see if she could sell those paintings and another painting, said Berry, who was unable to sell the paintings.

Kozlowski and Mark Swartz, Tyco's former chief financial officer, are on trial in State Supreme Court in Manhattan, charged with improperly using Tyco funds to enrich themselves and others. Each faces up to 30 years in prison. They have denied wrongdoing.

Prosecutors have charged that Kozlowski not only bought a Fifth Avenue apartment for himself with Tyco money, but used company funds and loans through the company to purchase artwork and furnish the multimillion dollar apartment. Defense attorneys have countered that the apartment was listed on Tyco's books and records and was actually a company asset.

Kozlowski was indicted in summer 2002 by state prosecutors, charged with evading more than $1 million sales tax on artwork. That indictment is on hold pending the outcome of the corporate larceny trial against Kozlowski and Swartz. The indictment stated that invoices reflected the artwork including the Renoir and Monet were sent to Tyco's New Hampshire headquarters when they actually were delivered to Kozlowski's Manhattan apartment.

Berry testified that she was asked in June 2001 to help Kozlowski and his wife locate two paintings to be placed on Kozlowski's boat. Berry later found out that the couple was no longer looking for paintings for the yacht and were instead interested in art for a Manhattan apartment. They agreed to meet in August in London to view paintings at Richard Green Gallery.

Berry said she visited the London gallery with the Kozlowskis before they decided to buy three paintings. Berry said she negotiated purchasing the artworks for $1.975 million.

Berry said she told the Kozlowskis that they didn't have to make the purchase immediately and she could do some additional research on how much similar paintings or works by those artists had sold for. They declined, she said. Berry said she then contacted them about a Monet she was looking at for another client in December 2001.

Kozlowski went with her to an apartment on Fifth Avenue and eventually purchased the painting for $3.95 million. Later that month Berry brought 15 paintings to the Kozlowskis' home in Boca Raton, Fla. After about an hour's viewing they agreed to buy four pieces for $8.8 million, she said.

Earlier, the company's former head of investor relations testified Wednesday that investors weren't told of millions of dollars of compensation paid to Kozlowski and Swartz.

Over objections by defense attorneys, prosecutor Kenneth Chalifoux asked Brad McGee several times if he was aware of special bonuses the two had received.

"Were you aware of a $25 million bonus for Mr. Kozlowski in 1999?" Chalifoux asked.

"No, I was not," McGee said in his third day on the stand.

An attorney for Kozlowski, made a motion for a mistrial, saying Chalifoux's line of questioning was unfairly prejudicial and deliberately ignored directions by the court. Judge Michael Obus denied the motion.

During cross-examination Wednesday, defense attorneys, as they have previously, argued that Kozlowski and Swartz never asked other Tyco employees to lie or conceal their compensation or give false statements about the workings of Tyco.

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