L. Dennis Kozlowski, the former CEO of Tyco International, and a symbol of executive greed and extravagance, was convicted yesterday for...
NEW YORK — L. Dennis Kozlowski, the former CEO of Tyco International, and a symbol of executive greed and extravagance, was convicted yesterday for looting millions of dollars from his onetime employer.
Kozlowski, 58, and Mark Swartz, the company’s former finance chief, 44, were found guilty in a New York State Supreme Court on all but one of 31 charges of grand larceny, securities fraud, conspiracy and falsifying documents. The trial was the second for the two men after the first ended in a mistrial.
Kozlowski’s chest heaved as the jury rendered the first guilty verdict. But he showed little emotion as the jury foreman read “guilty” 21 other times.
Most Read Stories
- What drivers can and cannot do under Washington state's new distracted-driving law
- Federal judge: ‘The citizens of Seattle are not going to pay blackmail for constitutional policing’
- Man shot at Seattle's Golden Gardens Park amid apparent gunfight
- '450 square feet of fear': Renter dreads rising cost for Fremont studio apartment | Seattle Sketcher
- With city income tax, is Seattle the next Detroit? | Jon Talton
Swartz, 44, looked ashen as he awaited his fate and slowly shook his head by the 12th guilty verdict against him.
Each faces a maximum of 15 years to 30 years. Justice Michael Obus set sentencing for Aug. 2.
Both men were freed after paying a $10 million bail.
Prosecutors for the Manhattan District Attorney’s Office charged Kozlowski and Swartz with stealing $170 million through unauthorized bonuses and company loans as well as lying about Tyco’s financial health to investors in order to pump up its share price and cash in on $430 million in stock options.
Prosecutors said the two men used their positions within Tyco, an industrial conglomerate with $40 billion in revenues, to secretly forgive loans without consent from the company’s board of directors.
“This is pretty close to a clean sweep for the government,” said Robert Mintz, a former federal prosecutor and now a partner at McCarter & English in Newark, N.J. “The prosecution basically hammered home the argument that these guys acted on their own.”
Outside the courthouse’s front entrance, Kozlowski’s lead attorney, Stephen Kaufman, told a large group of reporters that Kozlowski would appeal.
“Let me tell you all that we are very disappointed by the verdict,” Kaufman said. “So, today is a day of disappointment but there’s still hope there and it’s in Dennis’ favor (to) appeal, and that’s what we’ll be pursuing.”
The jury of six men and six women spent part of the winter and all of the spring listening to the testimony of 26 witnesses and the presentation of thousands of documents.
Kozlowski and Swartz were convicted after 11 days of deliberations.
Because Kozlowski and Swartz never denied receiving the money alleged by prosecutors, the government had to prove that the two men intentionally aimed to steal from Tyco, said Kirby Behre, a former federal prosecutor and partner at Paul, Hastings in Washington, D.C.
But establishing “criminal intent,” he said, was made easier once the government was able to describe some of the more notorious charges of self-indulgence detailed in the case.
Among those examples were Kozlowski billing Tyco $1 million for a 40th birthday party held for his wife on the Italian island of Sardinia. The party, some of which was recorded on video, showed waiters in togas filling glasses with vodka that poured off an ice sculpture in the form of Michelangelo’s David.
Other examples included furnishing his Manhattan apartment with a $6,000 shower curtain.
The guilty verdict was a major victory for prosecutors from the office of Manhattan District Attorney Robert Morgenthau.
A year ago, their optimism turned to bitter disappointment when Judge Obus was forced to declare a mistrial in April 2004 after six months of testimony when juror Ruth Jordan, apparently holding out for an acquittal, received an anonymous letter threatening her unless she voted to convict.
Jordan had created a storm a week earlier when she allegedly flashed an “OK” signal in the direction of a table occupied by the defense.
Jordan, a retired teacher who has a law degree, attended much of the second trial and was in the courtroom yesterday when the verdicts were read.
“I’m sorry,” she told Kozlowski’s wife, Karen, who was sitting nearby.
“From what I have seen of the second trial, I still think they’re not guilty,” she told reporters later.
Besides being free of juror oddities, this second trial was different from the first because Kozlowski testified.
After the guilty verdict, the defense’s decision to put the former CEO on the witness stand is likely to be second-guessed. Kaufman would not comment on the defense’s strategy.
Information on defendant reactions and ex-juror Ruth Jordan’s comments provided by Newsday.