Tyco's former CFO said a $12.5-million bonus "shouldn't have happened," the witness says.
By Associated Press
Published March 2, 2004
NEW YORK - A lawyer who investigated two executives charged with stealing $600-million from Tyco International testified Monday that one defendant admitted that his receiving a $12.5-million bonus and not reporting it was a mistake.
Attorney David Boies said that, in a conversation in July 2002, Mark Swartz, Tyco's former chief financial officer, acknowledged instructing a subordinate employee to show that Swartz's $12-5 million loan had been forgiven by Tyco.
Boies, perhaps best known as having served as Al Gore's chief lawyer in the 2000 presidential election recount battle, was the last witness in the five-month state Supreme Court trial in Manhattan, which is expected to go to a jury sometime next week. Boies told jurors Swartz told him he had made the request after being instructed by then-chief executive L. Dennis Kozlowski to record his loan and a $25-million loan to Kozlowski from the company as forgiven.
Boies, the prosecution's only rebuttal witness, said that when he told Swartz he did not see any justification for the multimillion-dollar payments, and would recommend to the board that the money be repaid, Swartz replied, "It was a mistake. It shouldn't have happened."
The $12.5-million is part of the $170-million that Swartz, 43, and Kozlowski, 57, are accused of stealing from Tyco by hiding unapproved pay and bonuses and by abusing loan programs. The two former executives are accused of illegally making $430-million more on Tyco stock by lying about the company's finances from 1995 to 2002.
They are charged with grand larceny, enterprise corruption, state business law violations and falsifying business records, and face up to 30 years in prison if convicted. The trial, which adjourned Monday, will resume March 8, when jurors will return to hear summations.
After Boies' testimony Monday, Swartz, who had already testified for nine days as the defense's only witness, returned to the witness stand.
He told jurors that his remark to Boies meant that he and Tyco had made a mistake by not reporting the forgiven $12.5-million loan on his W-2 tax form as compensation.
"It slipped through the cracks," Swartz testified.
