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Prosecutors: Tyco Execs Stole $600M

Oct 8, 2003 | AP

The two Tyco International executives accused of looting the company of millions of dollars spent like lottery winners but they "didn't win the jackpot, they stole it," prosecutors said.

L. Dennis Kozlowski, the former CEO, and Mark Swartz, the ex-chief financial officer stole $600 million from their company to buy things like yachts and fancy houses, Assistant District Attorney Kenneth Chalifoux said Tuesday in opening statements at the men's trial.

Defense lawyers contended that what prosecutors call a massive corporate larceny was actually appropriate reward for building Tyco into one of the world's largest and most successful companies.

The proceeding was set to continue Wednesday.

Stephen Kaufman, Kozlowski's attorney, explained that Tyco's compensation committee rewarded senior executives for meeting or exceeding corporate goals each year. An outside auditor, he said, reviewed and approved the committee's pay and bonus recommendations.

"There is no second set of books," Kaufman said. "There is no person who's going to come in here and speak in hush-hush tones about secret payments."

Charles Stillman, Swartz' lawyer, said to the jury: "How could Mark have been trying to steal when the company's external auditor was aware of everything?"

Kozlowski, 56, and Swartz, 45, are charged with larceny and enterprise corruption a charge usually aimed at organized crime figures and lesser offenses that include filing false business records and conspiracy.

Each could get up to 30 years in prison if convicted.

Prosecutors say Kozlowski and Swartz stole $170 million by claiming unauthorized compensation and made another $430 million on their Tyco shares by lying about the conglomerate's financial condition from 1995 into 2002.

Chalifoux told the court that the men stole money despite being paid handsome salaries. In 2000, the prosecutor said, Kozlowski earned $106 million and Swartz $54 million.

The key to the men's defense will be convincing the jury that Tyco's board knew about their compensation and that Kozlowski and Swartz worked hard to improve Tyco and deserved the pay.

The Tyco leaders' luxurious lifestyles first attracted attention when Kozlowski was charged in August 2002 with evading more than $1 million in New York state sales tax on $13 million worth of art including Renoir and Monet paintings — he had purchased.

A closer look by the Manhattan district attorney's office and the federal Securities and Exchange Commission revealed huge expenditures, payments and loans that prosecutors say were illegal.


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