Tyco Ex-Counsel Faces New Charges
Prosecutors on Monday stepped up their case against Tyco International Ltd. former general counsel Mark Belnick, accusing the onetime prosecutor of taking an unauthorized $12-million bonus.
Belnick, 56, who helped conduct the Senate probe into the Iran-Contra scandal, was accused last year of falsifying business records. He faces up to 25 years in prison if convicted of the new charge of grand larceny, which was announced by Manhattan Dist. Atty. Robert Morgenthau.
Prosecutors, who also accused Belnick of securities fraud, may be attempting to pressure him into helping them with their cases against former Tyco Chief Executive L. Dennis Kozlowski and former Chief Financial Officer Mark Swartz, lawyers said.
The two were indicted last year on allegations they looted Tyco of more than $600 million through stock fraud and illegal compensation.
“The D.A. is looking at Belnick as a ticket to bigger fish at Tyco,” said former prosecutor Jacob S. Frenkel, a white-collar crime lawyer with the Atlanta-based firm of Smith, Gambrell & Russell.
Belnick, free on $1 million bail, was led into the courtroom of State Supreme Court Justice Michael Obus with a raincoat covering the handcuffs on his wrists.
A former partner at Paul, Weiss, Rifkind, Wharton & Garrison, a New York firm with 523 lawyers, Belnick pleaded not guilty to the new charges. His bail was not changed.
Belnick’s attorney, Reid Weingarten, said the original falsification charges are “entirely frivolous” and “the latest charges are no better.”
“We’re cooperating fully with the D.A.’s office and have no comment on today’s indictments,” Tyco spokesman Gary Holmes said.
Some evidence Morgenthau is using against Kozlowski, Swartz and Belnick was provided by an internal Tyco investigation of executive compensation. Bermuda-based Tyco, which also has health-care and security businesses, sued the three men last year to recover unauthorized compensation, litigation that has been delayed as the former executives are prosecuted.
The new indictment accuses Belnick of receiving $2 million in cash and 200,000 shares of Tyco stock, Morgenthau said.
It also alleges he helped Kozlowski and Swartz hide a $2.5-million real-estate transaction involving Tyco and then-board member Lord Michael Ashcroft.
Morgenthau said he has no plans “at this time” to bring charges against Ashcroft.
Belnick previously had been charged with concealing more than $14 million in improper Tyco loans by failing to record them in a directors-and-officers questionnaire.
He faces up to four years in prison if convicted of falsification. Belnick asserts that other Tyco executives and auditors from PricewaterhouseCoopers knew of the loans.
The $12-million bonus cited in the new indictment was paid to Belnick over several months in 2000 and was a reward for successfully ending an investigation by the Securities and Exchange Commission into Tyco’s accounting, Morgenthau said.
Tyco shares rose 4 cents to $16.05 on the New York Stock Exchange.
