Video: Mistrial in Tyco case

updated 4/3/2004 2:53:34 PM ET 2004-04-03T19:53:34

A second trial of two former Tyco International executives accused of looting the company of $600 million will be a shorter, streamlined affair that favors the prosecution, legal experts say.

The trial that lasted nearly six months, before a judge declared a mistrial because of threats to one juror, was a “dress rehearsal” for the Tyco prosecutors and should help them refocus on the strongest charges against former Tyco CEO L. Dennis Kozlowski and former chief financial officer Mark H. Swartz, experts said.

“They could maybe put their case on an extreme diet and ’keep it simple, stupid,”’ said John Coffee, a Columbia University Law School professor who specializes in white-collar crime.

But after hearing from jurors who indicated what parts of the case were most persuasive, Coffee said, “I think next time the government might have the advantage. They know to focus on the things that resonated with the jury.”

Prosecutors want retrial at ‘earliest opportunity’
Prosecutors said they would retry Kozlowski, 57, and Swartz, 43, “at the earliest opportunity” after a judge declared the mistrial Friday because of pressure on one juror, who apparently received an intimidating letter and phone call urging her to convict.

“The prosecution really benefits the most” from the reprieve, said Susan Resley, a San Francisco lawyer and former Securities and Exchange Commission prosecutor who specializes in stock fraud. “The first trial was a dress rehearsal from which they could learn.”

Tightening up the case
But Resley agreed that prosecutors have “got to tighten up their case.”

Since opening statements began Oct. 7, prosecutors had called 47 witnesses and presented some 700 exhibits, including videotapes of Kozlowski’s $2 million birthday party for his wife on a Mediterranean island and of an $18 million Manhattan apartment crammed with $15 million in furnishings.

The defense called one witness: Swartz.

Prosecutors accused Kozlowski and Swartz of stealing $170 million by hiding unauthorized bonuses and secretly forgiving loans to themselves. They also accused the defendants of stealing an additional $430 million by pumping up Tyco stock by lying about the company’s finances. They had faced up to 30 years in prison if convicted.

The defense argued that the two had earned every dime and that the board of directors and auditors knew about the compensation and never objected.

Coffee said that mistrials can create advantages for the defense, who get a look at the entire case against their clients the first time around.

But in the Tyco trial, he said, “even with a poorly produced and paced prosecution, the jury was going to convict.”

Coffee was referring to the mountain of evidence and jurors’ comments that they were within hours or even minutes of reaching verdicts that would have included convictions on several of the top counts in the indictment. Some jurors said they would have likely reached a split verdict on the 32 charges of grand larceny, falsifying business records and conspiracy.

Experts said the comments could also prompt both sides to look for a plea deal for Kozlowski and Swartz.

On the other hand, defense attorneys could try to turn the mistrial and the publicity about the threatened juror and Kozlowski’s $6,000 shower curtain to their advantage, arguing that their clients couldn’t receive a new trial in New York, Coffee said. He doubted a change of venue motion would be granted, however.

Learning from mistakes
Michael Connolly, a Boston business and securities litigator, said prosecutors probably have learned from a few mistakes during the first trial.

“The trial’s length and the amount of evidence could have been overkill. If I were retrying the case, I would take a look at which witnesses, charges and exhibits I needed,” he said.

Former federal prosecutor Robert Mintz agrees.

“We will certainly see a more focused, more streamlined prosecution case next time, not nearly as long as the first trial,” he said. “A six-month trial is not good for the prosecution.”

Kozlowski still faces charges from 2002, when he was accused of evading more than $1 million in New York state sales tax on $13 million worth of art hanging on the walls of his Fifth Avenue apartment.

Shareholder civil cases are still pending against the company, and Tyco has also issued a statement saying it would pursue its own civil actions against Kozlowski and Swartz.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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