Ex-Tyco execs looted company, prosecutor says

/ Source: The Associated Press

Two former Tyco executives systematically looted the conglomerate by stealing over $150 million from shareholders, a prosecutor said in opening statements at their retrial Wednesday.

New York Assistant District Attorney Owen Heimer told the jury that Tyco’s former chief executive officer Dennis Kozlowski, 58, and former finance chief Mark Swartz, 44, betrayed the trust of the corporation’s shareholders.

“This case is the story about two men, these two defendants, who stole $150 million from a corporation named Tyco and the corporation’s ... shareholders,” said Heimer, referring to loans later forgiven by the firm.

Besides those questionable loans, the two are accused of hiding unauthorized bonuses and obtaining an additional $430 million through fraudulent stock sales.

Kozlowski and Swartz face charges of grand larceny, falsifying business records, securities fraud and conspiracy.  If convicted, the two men face up to 30 years in prison.

In what is expected to be a more streamlined case than the first trial, which ended in a mistrial, Heimer focused on what he called seven major thefts which occurred between August 1999 and July 2001.

Describing Kozlowski and Swartz as “two of the highest paid people in corporate America,” Heimer said they secretly forgave loans to themselves and lied to employees, the board of directors and the compensation committee.

“In short the defendants controlled the flow of information to the board of directors,” he said. “The defendants had no right to forgive themselves this amount of debt.”

Before the opening remarks at the corruption trial, State Supreme Court Judge Michael Obus gave the jury of six men and six women instructions for the trial.

Obus declared the original case a mistrial last April, ending 12 days of tense deliberations after an apparent holdout juror received a threatening letter. Days before the mistrial was called, an “OK” hand gesture by a juror toward the defense raised questions of jury tampering.

During the retrial prosecutors will place less emphasis than before on Kozlowski’s’ lavish spending, such as payments of $5 million for a diamond ring and $15 million for home furnishings, including a $6,000 shower curtain.

The first trial lasted six months and cost prosecutors $6 million. The retrial is expected to last four months.