Tyco Case Ends in Mistrial
The judge in the high-profile corruption trial of two former Tyco International Ltd. executives declared a mistrial Friday, citing pressure placed on one juror after her identity was revealed by the media.
State Supreme Court Judge Michael Obus said he had “no choice” but to grant a defense request to end the six-month trial of L. Dennis Kozlowski, Tyco’s former chief executive, and Mark Swartz, his onetime head of finance, on charges that they looted $600 million from the company and its investors.
The ruling was a dramatic ending to a case that initially focused on the lurid spending habits of Kozlowski but then cast a spotlight on the role of the media in widely publicized criminal cases.
The mistrial was a setback for the government in its efforts to prosecute white-collar crime, though Manhattan Dist. Atty. Robert M. Morgenthau vowed to retry the case.
Some jurors said afterward that they had been poised to deliver a verdict, including probable convictions on some of the 32 counts of grand larceny and other charges.
But the judge cut short their deliberations early Friday. Obus did not explain what he meant by pressure on the juror he cited, but news organizations widely reported that the woman had received a threatening letter.
Known as Juror No. 4, Ruth Jordan is a 79-year-old retired teacher whose unexplained gesticulations in open court a week ago stirred speculation that she was holding out for acquittals. Her courtroom gesture -- described by some who saw it as supportive of the defense -- prompted several news organizations to name her in stories about the jury’s deliberations.
The normally temperate Obus appeared exasperated as he chastised the swarm of reporters in the courtroom Friday for publishing Jordan’s name.
It was not illegal to name her, the judge said, but it broke with long-established precedent of withholding juror names until trials are completed. He said the move could discourage citizens from serving on juries.
He described Jordan’s courtroom gesture as “equivocal” and said there was no “finding” that she had done anything wrong.
“It is certainly a shame that this has to be done at this time,” Obus told the jury. “I hope that in the long run you don’t feel that this was a complete waste of your time.”
Charles Stillman, Swartz’s lawyer, said he was stunned by the sequence of events. “Over the 40 years I’ve been doing this ... I’ve never seen anything like this,” he said.
Stephen Kaufman, Kozlowski’s lawyer, said in a statement that “we are disappointed [that] because of events that occurred outside of the courtroom we were unable to bring this case to verdict.”
Kozlowski, 57, and Swartz, 43, were charged with grand larceny, conspiracy, fraud and falsifying business records. Each could have faced more than 25 years in prison if convicted.
Prosecutors said they stole $170 million from Tyco over seven years by giving themselves bonuses that weren’t approved by the conglomerate’s directors, and by decreeing that loans they took from the firm didn’t have to be paid back.
The government said they took an additional $430 million from shareholders by selling Tyco shares whose value they had fraudulently inflated by concealing material information.
The defense argued that Tyco’s board approved all the payments.
As one in a string of cases against high-level corporate executives, the trial drew attention in part because of Kozlowski’s opulent lifestyle. Prosecutors showed jurors a video of a lavish Roman-themed birthday party on the island of Sardinia for which Tyco paid half the $2-million tab, and played up expensive baubles such as a $6,000 shower curtain.
The trial took an unexpected turn March 25, when jurors sent three notes to the judge, describing their deliberations as bitter and indicating that one juror believed the men were innocent and refused to consider other jurors’ opinions.
The next day, Jordan made a gesture in court that some observers interpreted as an “OK” signal toward the defense team.
The Wall Street Journal published Jordan’s name in its online edition that afternoon. The New York Post put a sketch drawing of her on its front page the next day under the headline “Ms. Trial.” The Times published her name three days later, after it was mentioned in open court.
Some jurors said Friday that they saw the Post story with the rendering of Jordan.
“I was in the store buying a banana, and I thought, ‘Oh, God,’ ” Mark Glatzer, a software engineer from Manhattan, said in an interview. “I was worried for her.”
The naming of Jordan set off a furious debate about whether the media had interfered with the case.
“What happened here today has very serious implications for our system of justice,” said Mark C. Zauderer, a partner at Piper Rudnick in New York and chairman of a blue-ribbon state commission studying jury service.
He noted that the Tyco mistrial followed this week’s application by Martha Stewart’s defense team for a retrial. The lifestyle entrepreneur was convicted last month on obstruction-of-justice charges in a case centered on her sale of stock in ImClone Systems Inc. in 2001.
Her lawyers are seeking a retrial on the grounds that a juror in her case lied about his brushes with the judicial system.
The two widely publicized incidents might cause potential jurors to balk at serving in high-profile cases “out of concern and fear that their lives will be intruded into, their independence questioned and even that they might be intimidated,” Zauderer said.
Paul J. Cambria Jr., a Buffalo, N.Y.-based 1st Amendment lawyer, said the Tyco mistrial might lead judges to impose greater restrictions on media coverage during trials.
“It’s a timing situation,” Cambria said. “In the media’s economic competition of beating one another for stories, the judicial process is getting interfered with.”
If publicity during jury deliberations can influence verdicts, Cambria said courts probably would find that the potential for corrupting the judicial process “holds supremacy over the timing of the release of names.”
However, Floyd Abrams, another prominent 1st Amendment lawyer, cautioned against overreaction to “an aberration” like the Tyco trial.
“We can’t redraft legal principles because of a single case that went off the rails,” Abrams said.
The newspapers that published Jordan’s name “had a plausible journalistic justification,” he said. If indeed a juror during deliberations “comported herself in a way that she seemed to be allied with the defense, well, that’s an awfully newsworthy event.”
He said restricting access to jurors’ names could do harm to the cause of justice. In the Stewart case, for example, the ability to check into the background and veracity of a juror “keeps the system honest,” Abrams said.
“We stand by our reporting on this trial,” said Col Allan, editor in chief of the New York Post. “By her extraordinary behavior -- signaling her thoughts to the defendant -- the juror created public interest in her identity.”
Some jurors said late Friday that they believed Kozlowski and Swartz would have been convicted on some of the most serious counts if deliberations, which were in their 12th day, had been finished.
There probably would have been convictions on several counts of grand larceny, as well as the single counts of conspiracy and securities fraud, Glatzer said. “The facts of the case were leading in that direction,” he said. “We had a tremendous amount of evidence.”
Glatzer said the testimony of Swartz helped convince some jurors of the men’s guilt. He said several jurors with accounting knowledge told the other panelists during deliberations that Swartz’s mathematical explanations for how his bonuses were determined and paid out didn’t make sense.
“That turned the whole case around,” Glatzer said. “I don’t know what would have happened without that.”
Jurors also expressed anger at the length of the trial and what they saw as a weak prosecution presentation, especially the emphasis placed on Kozlowski’s lifestyle.
Dist. Atty. Morgenthau’s office is widely expected to condense its case in a retrial to make it briefer and more narrowly focused. A May 7 hearing was scheduled to discuss a new trial.
Jurors Bill Johnson, Glenn Andrews and Gregory Sutton said in an interview Friday night on CNN’s “Paula Zahn Now” that they thought the government had a strong chance to succeed in a retrial.
“If they streamlined their case and had a strong presentation, they could get some guilty verdicts,” Johnson said.
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(BEGIN TEXT OF INFOBOX)
The corporate scandal sheet
A look at some of the most high-profile recent corporate scandals and the status of pending legal action.
Adelphia Communications Corp.: Founder John Rigas and his two sons, as well as former Assistant Treasurer Michael Mulcahey, are on trial in federal court. They are accused of stealing tens of millions of dollars from the cable television giant’s investors to support a lavish lifestyle.
Credit Suisse First Boston: The company’s former investment banking star is scheduled to be retried in April on federal charges of obstruction of justice after a trial last year ended in a hung jury. Frank Quattrone made a fortune taking Internet companies public during the dot-com stock craze.
Enron Corp.: Former Chief Executive Jeffrey K. Skilling pleaded not guilty in February to fraud, conspiracy, insider trading and other federal counts related to the once-mighty energy giant’s collapse. Former Chief Financial Officer Andrew S. Fastow has pleaded guilty to two counts of conspiracy and agreed to cooperate with prosecutors.
HealthSouth Corp.: Fired Chief Executive Richard Scrushy is scheduled for trial in August on federal charges of leading a multibillion-dollar scheme to overstate HealthSouth earnings to make it appear the company was meeting Wall Street forecasts.
Martha Stewart Living Omnimedia: A federal jury convicted company founder Martha Stewart of conspiracy, obstruction of justice and making false statements related to a personal sale of ImClone Systems stock. She has requested a new trial, saying one juror lied about his background.
Qwest Communications International Inc.: Four former executives -- Thomas Hall, Bryan Treadway, Grant Graham and John Walker -- are on trial in federal court, accused of plotting to help the company improperly book $34 million in revenue.
Tyco International Ltd.: A state Supreme Court judge declares a mistrial in the case involving former CEO L. Dennis L. Kozlowski and former Chief Financial Officer Mark Swartz. They were accused of stealing $600 million from the company. The judge said there had been undue pressure on one juror. A retrial is possible.
WorldCom Inc.: Former Chief Executive Bernard J. Ebbers has pleaded not guilty to federal fraud and conspiracy charges for allegedly directing a massive accounting fraud now estimated at $11 billion. Former Chief Financial Officer Scott D. Sullivan has pleaded guilty to conspiracy and securities fraud charges and agreed to testify against Ebbers.
From Associated Press
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(BEGIN TEXT OF INFOBOX)
A timeline
Key events during deliberations:
March 18: Jurors begin deliberating the grand larceny and fraud case of former Tyco Chairman L. Dennis Kozlowski and former Chief Financial Officer Mark Swartz.
March 25: Jurors alert the judge overseeing the trial, New York Supreme Court Justice Michael Obus, that the atmosphere in the jury room has become “poisonous” as one juror stridently holds out for acquittal. Obus refuses to declare a mistrial.
March 26: Obus asks jurors to remain open-minded, but Juror No. 4 allegedly flashes an “OK” hand signal to defense attorneys as she passes their table. Jurors tell Obus that the deliberations are still not respectful or in good faith.
March 26: The Wall Street Journal’s online edition publishes the name of Juror No. 4, Ruth Jordan.
March 27: The New York Post runs a sketch of Jordan on its cover showing her making an “OK” gesture, igniting wide spread media coverage.
Monday: Attorneys for Kozlowski and Swartz repeat their request for a mistrial, citing pressure on the juror, but Obus denies their motion.
Tuesday: Defense attorneys again ask for a mistrial.
Thursday: Jurors ask to review documents that Tyco used to explain the defendants’ large stock sales.
Friday: Judge declares a mistrial citing undue pressure on one of the jurors.
Sources: Associated Press, Reuters, Times research
