Tyco Sues Ex-Chief Financial Officer, Claiming He Owes Firm $400 MillionApr 3, 2003 | AP
Tyco International Ltd. has filed a $400 million lawsuit against former Chief Financial Officer Mark H. Swartz, claiming he looted the conglomerate for his personal gain.
Swartz already faces criminal charges of theft and fraud filed by government prosecutors, who say he and former chief executive L. Dennis Kozlowski stole $600 million from Tyco. He has pleaded innocent.
The civil lawsuit claims Swartz used Tyco to buy for himself a $16.5 million penthouse apartment on Central Park South; tickets for games of the Miami Heat and Florida Panthers; cable service, country club memberships, and concert tickets to see Billy Joel and Elton John.
It also accuses Swartz of accepting more than $134 million in pay from 1997 to 2002 for "services that were never rendered" and awarding himself tens of millions of dollars in unauthorized bonuses.
Tyco filed the lawsuit late Tuesday in Manhattan federal court.
Swartz's lawyer, Charles Stillman, did not immediately return a call for comment.
Tyco, which is based in Bermuda but headquartered in Portsmouth, N.H., makes everything from coat hangers to security systems and medical devices.
Tyco claims it tried to take Swartz to arbitration in October to resolve the complaints but says Swartz blocked the move. The company says Swartz agreed to the arbitration process when he left the Tyco board last August.
The civil lawsuit also says Swartz made millions of dollars by abusing Tyco loan programs to speculate in real estate and investments and paying former Tyco director Frank Walsh a $20 million fee without telling the board of directors.
The company is seeking a $400 million judgment. It also wants the court to order Swartz to account for all the money he received from Tyco both legal compensation and any unauthorized funds.
In a separate lawsuit filed in December, Tyco accused Kozlowski and Swartz of making more than $40 million off dozens of "short-swing" stock trades beginning in August 2000.
Government rules say the company is allowed to seize any profits made by corporate insiders who buy and then sell their firm's stock within a six-month period.
Additionally, Swartz was indicted in New Hampshire in February on federal tax evasion charges. He pleaded innocent to that indictment and faces trial there later this month.
Swartz was freed on $5 million bail on the tax charges. He was freed on $50 million bail on the original New York charges.