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More Defendants Expected 'Relatively Soon' In Tyco Case

Sep 20, 2002 | USA Today

Former Tyco International CEO Dennis Kozlowski will be joined soon by new co-defendants in his multimillion-dollar corruption case, the lead prosecutor said Thursday as the ousted executive moved toward posting a $10 million bail bond.

''The grand jury's still sitting,'' Manhattan Assistant District Attorney John Moscow told state Supreme Court Justice Michael Obus. ''We expect additional charges against additional defendants.'' He said the new targets would likely be charged ''relatively soon.''

USA TODAY reported Monday that prosecutors are focusing part of their investigation on former Tyco director Frank Walsh, a Kozlowski friend. Investigators also are examining the roles of two to three possible other defendants, people with knowledge of the case said.

Kozlowski, allegedly acting without the knowledge of Tyco's board, in July 2001 authorized a $10 million payment to Walsh and $10 million to a charity where Walsh was a trustee. The payments ostensibly rewarded Walsh for helping arrange Tyco's acquisition of CIT Group.

Prosecutors declined to comment about Walsh on Thursday. He has not been contacted by prosecutors, Walsh spokesman Gregory Miller says.

Tyco sued Walsh over the $20 million in June, the same month Kozlowski was indicted for allegedly evading more than $1 million in sales taxes on art. Prosecutors dramatically escalated the Kozlowski case last week, announcing a new corruption and grand-larceny indictment against him and former Tyco CFO Mark Swartz. They are accused of improperly reaping more than $600 million from Tyco.

Mark Belnick, 55, the firm's former chief counsel, was charged in a related indictment with falsifying business records to conceal more than $14 million in company loans.

All three appeared at a hearing Thursday aimed at settling a dispute over bail requirements -- $1 million for Belnick, $50 million for Swartz and $100 million for Kozlowski. They can post security equal to 10% of the amounts. Belnick posted bond Thursday. But for Kozlowski and Swartz, the issue has flared into a dispute more commonly seen in a Mafia case.

Kozlowski's ex-wife, Angie, agreed to post $10 million cash from the couple's divorce settlement in 2000. Swartz offered Tyco stock he got in 1995, before the alleged crimes. Moscow said he would object to using the assets if he determines they represent ''the fruits of a crime'' against Tyco. Obus extended the posting deadline until Friday.

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