Ex-Aide to Tyco CEO Tells Jury of Affair, Loans

L. Dennis Kozlowski’s former executive secretary at Tyco International Ltd. told a New York jury Thursday that she had an affair with her boss and he asked her to apply for company loans to cover his personal expenses.

Mary Murphy testified that she processed requests at Kozlowski’s direction for more than $16 million in loans. The money was used to cover an $11,104 payment for maintenance on his boat, $5,000 in spending money for Kozlowski’s daughter and $8.3 million toward his investment in the New Jersey Nets of the National Basketball Assn., she said. Kozlowski once owned about 16% of the team.

“He would just tell me it was a Key Employee Loan,” she said. “He would just ask me to complete the form.”

When she left Tyco in 1999, Murphy was earning $90,000 a year, she said. She told jurors a $299,000 mortgage loan from Tyco on a Massachusetts home was forgiven as part of her severance package. She also received four years’ pay and benefits and a $62,000 bonus, she said.

Kozlowski and Mark H. Swartz, Tyco’s former financial chief, are accused of looting the conglomerate of $600 million.