Prosecutor Says Tyco Lawyer Knew of Payoff
Tyco International Ltd. former general counsel Mark Belnick was a “top-flight lawyer” who knew that a $17-million bonus was a payment to cover up wrongdoing by his boss, L. Dennis Kozlowski, a prosecutor told jurors at Belnick’s criminal trial Thursday.
Assistant Dist. Atty. John Moscow ended his closing argument by urging a New York jury to convict Belnick on charges that he stole the bonus in 2000, defrauded Tyco shareholders and falsified documents to hide almost $15 million in loans he took from the company.
Belnick was “a man who saw an opportunity to get money,” Moscow told jurors, who are set to start deliberations today. “He lost his moral compass.”
Moscow said the payment was a payoff for Belnick’s silence about fraud at Tyco, including then-Chief Executive Kozlowski’s use of a loan program to pay his girlfriend $100,000. If convicted, Belnick, 57, faces up to 25 years in prison.
Belnick claimed the $17 million was a bonus for leading Tyco through an investigation by U.S. securities regulators.
In his closing argument, Moscow said that Belnick couldn’t have believed in 2000 that Kozlowski was a “truth teller,” as he testified, when Kozlowski said Tyco was giving him a bonus.
Belnick testified that he didn’t question Kozlowski’s authority to give him the $17-million bonus, which he said the CEO promised him in a late-night meeting in Kozlowski’s room at Washington’s Four Seasons hotel in 2000. The meeting came weeks after Belnick learned that Kozlowski had set up an accounting reserve in 1999 to pay for Belnick’s firing.
“That’s not the basis on which to say the boss is a truth teller,” Moscow said.
Moscow argued that if Belnick believed the bonus was legitimate, he would have documented it -- but didn’t because he made an illegal agreement with Kozlowski, Moscow said.
After Kozlowski gave him the money, Belnick protected his boss by keeping regulators and Tyco’s board in the dark about Kozlowski’s misuse of the company loan program, a secret $20-million payment Kozlowski made to a Tyco director and a 2002 grand jury subpoena seeking information about his pay, Moscow told jurors.
Moscow said Belnick also couldn’t have relied, as he testified, on advice from then-Chief Financial Officer Mark Swartz that Belnick didn’t need to disclose almost $15 million in no- interest relocation loans on company documents he was accused of falsifying.
Belnick used $10 million of the loans to buy a home in Utah.
Kozlowski and Swartz were tried on charges that they took $600 million from Tyco through illegal compensation and stock fraud. Michael Obus, the judge in both Tyco trials, declared a mistrial in that case in April.
Tyco, the world’s biggest maker of security systems, is based in Bermuda and run from offices in West Windsor, N.J.
