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Tyco Execs' Bond Money Under Suspicion

Sep 23, 2002 | USA Today

Former Tyco CEO Dennis Kozlowski remains free on corruption and grand larceny charges at least for now, but he faces a legal battle this week over the $10 million bail bond his ex-wife posted on his behalf as security for $100 million bail.

Manhattan prosecutors are expected to argue at a scheduled Friday hearing that the cash put up by Angeles Kozlowski, part of the couple's divorce settlement in 2000, could represent money improperly taken from Tyco.

Manhattan Assistant District Attorney John Moscow told a judge during a hearing last week that prosecutors would ''seek to ascertain the source of that $10 million to see if it's the fruits of a crime.''

Kozlowski's attorney, Stephen Kaufman, predicted during the hearing that prosecutors would be unable to document any taint to the cash.

The defense camp noted that Kozlowski legitimately earned an estimated $25 million as CEO of the Bermuda-headquartered conglomerate during 2000.

Prosecutors are also expected to challenge the $50 million bail scheduled to be posted today by former Tyco CFO Mark Swartz.

He plans to put up shares of Tyco stock his lawyer said the executive received in 1995.

His attorneys said the posting would survive a prosecution challenge because Swartz got the stock before the period during which the indictment alleges criminal conduct.

Kozlowski and Swartz are accused of illegally reaping more than $600 million from Tyco through theft and improper sales of company stock.

Mark Belnick, Tyco's former chief corporate counsel, is charged separately with falsifying business records to hide millions in unauthorized loans from the company.

Prosecutors have not challenged the bail Belnick posted last week. All three have pleaded not guilty.

At a separate hearing set for Tuesday, defense attorneys are expected to challenge the freeze that prosecutors obtained on $600 million in assets held by Kozlowski and Swartz.

It was that freeze, secretly approved by a judge two days before the Sept. 12 indictments, which forced the two defendants to scramble to raise bail.

Among other arguments, the lawyers are expected to contend that the New York court lacked legal authority to approve a freeze of assets held in several other states.


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