Tyco International’s former general counsel Mark Belnick was charged with grand larceny and two other new allegations Monday as Manhattan prosecutors ratcheted up the criminal case against him.
A criminal indictment accused Belnick, 56, of secretly accepting a bonus worth $12 million for his purported role in helping end a 2000 Securities and Exchange Commission investigation of Tyco’s accounting without action by the agency. Tyco’s board was not told about the cash-and-stock bonus, as required, Manhattan District Attorney Robert Morgenthau said.
Belnick was also accused of scheming with former Tyco CEO Dennis Kozlowski and ex-CFO Mark Swartz to hide a $2.5 million payment to company director Lord Michael Ashcroft for a home Ashcroft owned in Florida.
The indictment also accused Belnick of making false representations about Tyco’s performance, thus persuading investors to approve proxies that enabled Kozlowski to keep control of the conglomerate.
Prosecutors added the charges to allegations that Belnick filed false business records to hide $14 million in Tyco loans he used to buy new homes in New York City and Utah.
Morgenthau’s office announced the new charges, which carry a maximum 25-year prison term, as prosecutors increased pressure on Belnick to agree to a plea bargain.
”This is a case where the system of checks and balances broke down,” said Morgenthau, referring to Belnick’s legal duty as chief counsel to safeguard investors.
Belnick, who arrived in handcuffs for a brief arraignment in Manhattan State Supreme Court, pleaded not guilty. Defense attorney Reid Weingarten said he was confident that Justice Michael Obus would throw out the case.
Kozlowski and Swartz are charged with illegally reaping more than $600 million from Tyco through loans, bonuses and stock sales. They have pleaded not guilty.
Morgenthau’s office, the SEC and the U.S. attorney’s office in New Hampshire continue to investigate Tyco issues. Monday’s indictment shows that part of the focus remains on Tyco’s board.
People familiar with the inquiry into Ashcroft’s Boca Raton, Fla., home sale said prosecutors have explored whether the 1997 sale was related to Tyco’s merger that year with security firm ADT, which Ashcroft then headed.
Investigators questioned the deal because Ashcroft sold the home to his wife for $100. That same day, she sold it to a Tyco official for $2.5 million. A corporate spokeswoman for Ashcroft’s businesses referred questions to Tyco, which declined to comment.