Former Tyco Chief Denies Stealing From Company
Taking the witness stand in his own defense, former Tyco International Ltd. Chief Executive L. Dennis Kozlowski denied Wednesday that he stole hundreds of millions of dollars from the company to bankroll an opulent lifestyle.
“I never conspired with anyone at Tyco to commit a crime,” Kozlowski told jurors.
Kozlowski and his former finance chief, Mark Swartz, are accused of grand larceny, securities fraud and conspiracy. Prosecutors allege that the men stole $600 million from Tyco -- partly by giving themselves bonuses that weren’t approved by corporate directors, and by decreeing that they didn’t have to repay loans from the company.
Kozlowski said he was entitled to his multimillion-dollar bonuses and that the forgiveness of personal loans came in lieu of his getting a full bonus. He spoke in a conversational tone, sometimes delivering rambling answers to questions from his attorney.
Kozlowski didn’t testify in the first proceeding, which ended in a mistrial a year ago. His defense team had hinted that the former CEO would take the stand in his second trial, but kept observers guessing until Wednesday.
“The client wanted to tell his story,” Stephen Kaufman, the lead defense lawyer, said in an interview.
Some legal experts said Kozlowski’s decision might have been driven by interviews with jurors after the first trial, which indicated that a majority favored conviction.
“Under those circumstances, you would expect the defense to rethink its strategy,” said Robert Morvillo, a New York attorney who represented Martha Stewart in her obstruction-of-justice case last year.
Testifying carries big risks, however, and has appeared to backfire in recent cases of high-profile corporate defendants.
Former WorldCom Inc. chief Bernard J. Ebbers and Silicon Valley investment banker Frank Quattrone each took the stand in their cases. But both were convicted, and jurors said afterward that the men appeared to be evasive during cross-examination. Stewart did not take the stand, but was convicted.
One risk is that the defendant may alienate a jury by coming across as too glib. Another is that jurors may not relate to a jet-setting corporate titan who spent $2 million on his wife’s 40th birthday bash in Sardinia -- putting half the bill on the company’s tab.
“He’s not a very sympathetic character,” Jenice Malecki, a New York criminal attorney, said of Kozlowski. “And he’s probably something of a salesman. It’s easy for a person like that to trip themselves up, saying what they think people want to hear, rather than what they remember.”
During his testimony, Kozlowski addressed many of the actions that prosecutors have portrayed as evidence of his alleged theft, including a New York apartment that was bought by Tyco but put in Kozlowski’s name. The former CEO said that was done because the building’s co-op board did not allow corporate buyers.
Alluding to the apartment’s grandiose interior decorating -- including an infamous $6,000 shower curtain and $15,000 umbrella stand -- Kozlowski acknowledged that an “outrageous sum” was spent. But he downplayed his role, saying a Tyco underling worked with the interior designer.
The first trial of the two men ended a year ago after a juror’s actions upstaged the legal proceedings. The juror, Ruth B. Jordan, made a gesture in court that some observers interpreted as an “OK” sign to the defendants. Jordan was identified by several news organizations and subsequently received a threatening letter, prompting the judge to declare a mistrial a week later.
As she has earlier in the case, Jordan came to state Supreme Court in Manhattan on Wednesday and reiterated that she thought the government had not proven its case.
“I think he’s telling the truth,” Jordan said at the end of the day.
Prosecutors are expected to begin their cross-examination of Kozlowski today.
Associated Press and Bloomberg News were used in compiling this report. Hamilton reported from New York and Kristof from Los Angeles.
