Video: Tyco verdict
updated 6/20/2005 4:18:52 PM ET 2005-06-20T20:18:52

Prosecutors won a big victory in the fight against corporate greed last week. Two former Tyco executives were found guilty of stealing more than $600 million from their company in corporate bonuses and loans.

Executives Dennis Kozlowski and Mark Swartz made headlines for hosting a $2 million toga party on the island of Sardinia.  The luxurious bash was part of a week-long birthday party for Kozlowski's wife. 

But, prosecutors said half of it was paid for with company money.  Kozlowski, Tyco's former CEO, was found guilty of conspiracy, fraud and falsifying business records. 

His former CEO, Mark Swartz, was found guilty of grand larceny, securities fraud and also falsifying business records.  They're facing up to 25 years behind bars.  These are just two in a list of former top executives now facing hard time.

Mike France, an attorney and senior writer for BusinessWeek magazine, covered the trial and professor John Coffee, teaches corporate law at Columbia Law School.  They both joined Dan Abrams on 'The Abrams Report' to discuss the guilty charges and possible jail sentences.

ABRAMS: All right, Mr. France, what was it that did it this time?  When they spoke to the jurors in the last case, where the judge declared a mistrial, it seemed that they weren't impressed with that video of the party.  They said that it didn't really matter to them.  What do you think did it in this case? 

MIKE FRANCE, BUSINESSWEEK SENIOR WRITER: I think you can actually overanalyze these cases somewhat.  At some level, the first case really came down to the fact that you had somewhat of a rogue juror, just one, and the other jurors really would have convicted the both of them.  So I think that was part of it.  I think it's also true though that the prosecutors made some tactical changes.  Basically, they just stopped boring the jury.  They ran a very, very long case and they put in a lot of extraneous material, and I think that probably also helped. 

ABRAMS:  Did they steal money?  I mean we talk about it, but let's sort of put it in truly lay terms.  They were using company money for their own use and that's the equivalent of stealing money, right? 

FRANCE:  That's exactly what it was.  It's not as if they were not finding some cash somewhere in the facility and walking out with it.  But they wound up getting a whole lot more money than they ever could have if they'd had to physically grab dollar bills. 

ABRAMS: Did he think he was going to be acquitted? 

FRANCE: I think he had no idea.  I think anytime any defendant finds himself in front of any jury with this type of evidence they have to be concerned.  Certainly, he must have been happy by the way the first thing turned out and he also spoke on his own behalf.  So perhaps he felt a little more confident the second time around.  But anybody who thinks they can predict what's going to go under those circumstances I think is deluded.

ABRAMS:  Before I go to Professor, Coffee, did his own testimony hurt him? 

FRANCE: Well my understanding is that his own testimony really did hurt him.  Because it really exposed him to cross-examination, and he simply had no good explanation for how it's possible, for instance, that he couldn't be aware of an additional $25 million on his tax return. 

ABRAMS: All right, Professor Coffee, let's talk big picture here.  It seems like every one of these big CEOs who are going to trial are eventually getting convicted. 

JOHN COFFEE, COLUMBIA LAW SCHOOL PROFESSOR:  That's what is happening in New York, at least.  You can now take four very complicated, long-lasting business trials involving evidence of accounting, evidence of corporate procedures, evidence that sounded like it was beyond the ability of some juries to comprehend, and in Adelphia, in the Quattrone case, the WorldCom case and now in Tyco.  We‘ve gotten four convictions.  It at least shows the prosecutors can convict when they are well prepared. 

ABRAMS: WeLet's go through those cases that you mentioned.  I want to compare them to what's happening in some of these "celebrity trials."  I mean because these are the celebrity trials of the business world. 

We‘ve got: WorldCom CEO Bernie Ebbers convicted of masterminding an $11 billion fraud;  Adelphia Communications founder John Rigas convicted of conspiracy, bank fraud and securities fraud; former investment banker Frank Quattrone convicted of obstruction of justice; four former Merrill Lynch and one Enron executive convicted of conspiracy and fraud. 

And yet Michael Jackson was acquitted on child molestation, conspiracy and giving alcohol to minors.  O.J. Simpson was acquitted of murder.  Sean P. Diddy Combs was acquitted of having a gun.  And Robert Blake acquitted of murder. 

Is there anything we can read?  Is this the bottom line that jurors just may not like these corporate CEOs and they might like these celebrities? 

COFFEE:  Well first of all, I don't think most of these jurors knew who were these defendants were until the first day of the trial.  It may be well known to the business press, but Mr. Kozlowski or Mr. Quattrone were not names known to the average person riding the New York subway whereas Michael Jackson is.

Secondly, I've got to say that the evidence was substantially weaker in the Michael Jackson trial.  There was a debate between whether he was a molester or whether the accusers were extorters and I think the jury couldn‘t make up their mind and decided to give the benefit of the doubt, as they should, to the defendant. 

ABRAMS:  I didn't think I was going to have Professor Coffee doing Michael Jackson analysis, I love it.  All right, let me ask you, Martha Stewart then, she sort of walks the line here.  She was convicted of conspiracy, obstruction of justice, and lying.  She is someone who the jurors would have known, right?

COFFEE: Certainly was and she was convicted.  Also a case that involved some complexity.  I said there were four major cases in New York and you've added that there has been a fifth major case in New York — all of them involve convictions.  

ABRAMS: I have to tell you, to me, there's a difference between Martha Stewart and some of these criminal cases is in a way.  The real question with Martha Stewart was should she have been charged at all.  I've said publicly on this show before that I think she probably wouldn't have been charged had she not been Martha Stewart. 

But once she was charged, it was so clear she was guilty because it was so easy to understand.  Lying is something that's easy to understand.  In a lot of these other cases, even Robert Blake, you know was there the proper intent?  With Michael Jackson, there were some gray area, et cetera.  In the actual evidence in the Martha Stewart case, the way she was going to get off was by somehow these jurors believing that she shouldn't have been charged at all. 

COFFEE: Well you're right.  I think that was a case that once she decided to go to trial and not to settle early she had very little chance on the factual issues.  In contrast, the complexity of either the Tyco case, the Adelphia case or WorldCom could have totally confused jurors that didn't try hard.  What you‘ve seen here is juries that work for 10 or 11 days evaluating the evidence, and I think they behaved as exemplary juries. 

ABRAMS: Professor Coffee, how much time, as a practical matter, are Kozlowski and Swartz facing now? 

COFFEE: =This is in state court not federal court, so the prosecution says 25-years, but there is parole in New York and there is much more discretion in the sentencing judge.  As a practical matter, the sentencing judge here may well sentence them to something like 10 or 12 years and they might serve something like five or six years.  That would be consistent with New York's sentencing practice.

Watch the 'Abrams Report' for more analysis and interviews each weeknight at 6 p.m. ET on MSNBC TV.

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