Judge Tells Tyco Jury to Ignore Verdict in WorldCom Exec Case
The judge in the trial of former Tyco International Chief Executive L. Dennis Kozlowski told jurors Wednesday to rely solely on evidence in their fraud case, one day after WorldCom Inc. founder Bernard J. Ebbers was convicted of a similar crime in a courtroom down the street.
“I know there’s been a fair amount of publicity resulting from the verdict in an unrelated case,” Justice Michael Obus told the state court jury in New York without mentioning Ebbers by name. The judge told jurors they must rely on the evidence and law presented “at this trial.”
Ebbers, who was also a chief executive, was convicted in a nearby federal courthouse of directing an $11-billion fraud that triggered the largest bankruptcy filing in U.S. history. A jury found him guilty of conspiracy, securities fraud and lying to the Securities and Exchange Commission. Ebbers, 63, may spend the rest of his life in prison. Kozlowski is also charged with fraud.
In the Kozlowski trial Wednesday, his lawyer Stephen Kaufman asked Obus to instruct the jury that “there is no linkage” between the Ebbers case and the trial of Kozlowski and Tyco’s former chief financial officer, Mark Swartz. Kaufman made the request before the panel entered the courtroom.
Prosecutors didn’t object. Obus told lawyers he saw “at least the potential” for prejudice from coverage of the Ebbers verdict.
Kozlowski, 58, and Swartz, 44, are accused of giving themselves and others $150 million in unapproved payments and of defrauding shareholders by inflating the value of Tyco stock. They are being retried after a mistrial was declared in April.
The two men face 31 charges of grand larceny, conspiracy, falsifying business records and securities fraud. The most serious charge of grand larceny carries a maximum 25-year sentence.
The first trial of Kozlowski and Swartz ended after a juror told Obus that she had been threatened. The same juror had previously been named in news reports as a holdout who made an encouraging gesture to the defendants.
In her second day of testimony, Tyco’s former head of executive compensation, Donna Sharpless, reiterated that she didn’t learn about the forgiveness of millions of dollars in company loans for Swartz and Kozlowski until years later.
“There was nothing in any of the payroll information I ever received that identified anything as loan forgiveness,” she said about one such award.
The defendants are accused of abusing the company loan programs to fund lavish lifestyles and of awarding themselves unauthorized bonuses in the form of loan forgiveness to erase their debts.
