A state judge yesterday sentenced former Tyco International executives Dennis Kozlowski and Mark Swartz to between 8-1/3 and 25 years in...
NEW YORK — A state judge yesterday sentenced former Tyco International executives Dennis Kozlowski and Mark Swartz to between 8-1/3 and 25 years in prison for looting their company of millions to pay for lavish parties, luxurious homes and extravagances such as the $6,000 shower curtain that hung in Kozlowski’s $31 million Fifth Avenue apartment.
In a case that came to symbolize an era of corporate greed, State Supreme Court Judge Michael Obus also ordered the pair to pay nearly $240 million in fines and restitution.
Kozlowski and Swartz were taken into custody and led from the packed courtroom in handcuffs as relatives sobbed.
In June, a jury found former Tyco CEO Kozlowski, 58, and former Chief Financial Officer Swartz, 45, guilty of criminal counts of grand larceny, conspiracy, securities fraud, and eight of nine counts of falsifying business records.
Most Read Stories
- Amazon unveils ‘self-driving’ brick-and-mortar convenience store WATCH
- UW Huskies awarded No. 4 seed for College Football Playoff, to play No. 1 Alabama in Peach Bowl
- Three rounds of lowland snow possible in Western Washington
- Once extinct in Washington, fishers return to Mount Rainier
- Seahawks’ Earl Thomas hints at retirement on Twitter after breaking bone in leg vs. Panthers
Obus yesterday imposed the same sentence on both men. He ordered Kozlowski to pay a $70 million fine and Swartz to pay a $35 million fine. He ordered both men to pay a combined $134.4 million in restitution of illegal bonuses back to Tyco.
Under state law, Kozlowski and Swartz will be officially eligible for parole in eight years and four months, though they could apply for work release in about six years.
Legal experts said it is unlikely, though not impossible, that either man would serve much more than eight years and four months.
There is no parole in the federal system under which other executives have been sentenced.
Obus did not specify where the two men would serve their terms, saying corrections officials would make that decision. But the judge said he did not view either man as a security risk, indicating he would not object if they are sent to a minimum-security facility.
Former prosecutor David Gourevitch said the state had no facilities comparable to federal minimum-security prisons such as the one where media entrepreneur Martha Stewart served jail time.
“In the federal system, outside of maximum-security places, generally people are physically safe. I don’t think anybody would say that about New York state prison,” Gourevitch said. “And from a state perspective, this is one of the longest sentences in a corporate fraud case that I can recall.”
The stiff sentences for Kozlowski and Swartz follow strong punishments for other white-collar defendants convicted in the wave of cases that followed the collapse of the Internet bubble and multibillion-dollar frauds at companies such as WorldCom and Enron.
Former WorldCom Chairman Bernard Ebbers, 63, was sentenced to 25 years in prison for orchestrating an $11 billion accounting fraud.
John Rigas, 80, founder of Adelphia Communications, received 15 years in prison for stealing millions from the cable company for personal extravagances, hiding more than $2.3 billion in debt and systematically lying to investors.
Rigas’ son and Adelphia’s former CFO, Timothy Rigas, received 20 years in prison.
Kozlowski and Swartz each made brief statements in court yesterday, asking Obus to be lenient. Their lawyers pleaded with the court to recognize the former executives’ charitable works and the dozens of letters sent on their behalf.
Prosecutors, by contrast, asked Obus to send a message that corporate theft will be treated just like grand larceny committed with a handgun. They asked for the maximum 15 to 30 years for both men.
In imposing the sentence, Obus said, “The heart of this case is basic larceny.” He expressed befuddlement at the two men’s plight, asking, “how the defendants, with all they had going for them, managed to get themselves into this disastrous position.”
The two men’s lawyers said they would seek to have their clients released on bail pending appeal of their convictions.