Retrial of Tyco Ex-Executives to Begin Today
Two top Tyco International Ltd. executives accused of looting millions of dollars from the company to finance lavish lifestyles go on trial in New York for a second time today.
The executives’ first trial, which lasted six months, ended in a mistrial last year because of a menacing letter and telephone call to a juror. Prosecutors plan to present a leaner, shorter case this time around.
In the retrial, prosecutors are expected to focus less on items such as former Tyco head L. Dennis Kozlowski’s $6,000 gold-threaded shower curtain and more on how he and codefendant Mark Swartz allegedly looted the company.
The defendants each face as many as 30 years in prison if convicted of the most serious charges.
In the first trial, prosecutors gave jurors a videotaped look at the $2-million birthday party that Kozlowski, Tyco’s then-chairman and chief executive, threw for his wife on a Mediterranean island, and a video tour through his $18-million Fifth Avenue apartment.
Jurors were told that Kozlowski spent about $11 million of Tyco’s money to furnish the apartment. The furnishings included a $2,900 set of hangers, a $4,995 blue-and-gold bed skirt and a $2,665 blue velvet pillow.
The jurors also saw a Persian rug, 20 feet by 16 feet, that cost $191,250; a walnut clock that set Tyco back $113,750; and a pair of French antique stools bought for $125,000.
Prosecutors said at the time that the extravagances demonstrated the defendants’ greed and showed where some of the money they allegedly stole ended up.
Although the prosecutors have declined to say how they might pare the evidence at the retrial, which they expect to last about four months, legal experts say they should avoid paying too much attention to the defendants’ spending.
Kozlowski, 58, and Swartz, 44, the company’s former chief financial officer, are charged with grand larceny, falsifying business records, conspiracy and business law violations.
Prosecutors said the defendants stole $170 million by hiding unauthorized bonuses and secretly forgiving loans to themselves and pocketed an additional $430 million by pumping up Tyco stock by lying about the state of the company’s finances.
Defense lawyers said Kozlowski and Swartz earned every penny they got from Tyco.
In an interview with the New York Times published Sunday, Kozlowski said he earned “enormous sums” of money because “I worked my butt off, and it was all based on my performance in Tyco’s long-established pay-for-performance culture.”
He also said the $6,000 shower curtain, purchased by his decorator, was not his idea.
Tyco, which has about 270,000 employees and $36 billion in annual revenue, makes a wide range of products including electronics, medical supplies and security devices.
