Print

Email story

Comment

Email editor

Ex-Tyco bosses get up to 25 years

The two were ordered to prison for stealing hundreds of millions of dollars from the company. A judge also ordered them to pay restitution.

NEW YORK - L. Dennis Kozlowski, the former CEO of Tyco International Ltd., and former Tyco finance chief Mark Swartz were sentenced Monday to up to 25 years in prison for stealing hundreds of millions of dollars from the company in a case that outraged the public with its tales of executive greed and excess.

The men, who were immediately ordered into custody, will be eligible for parole after serving eight years and four months.

Family members wept in the gallery as the sentences were imposed. Kozlowski was led out of the front of the courtroom in handcuffs as his wife quietly sobbed from a bench three rows back.

State Supreme Court Justice Michael Obus ordered Kozlowski and Swartz to pay a total of $134-million in restitution; in addition, Kozlowski was fined $70-million, Swartz $35-million.

The sentences capped a case that exposed the executives' extravagant lifestyle after they pilfered about $600-million from the company, including a $2-million toga birthday party for Kozlowski's wife on a Mediterranean island and an $18-million Manhattan apartment with a $6,000 shower curtain.

Obus did not specify where the two former executives will serve their terms. He said that decision would be made by the state corrections officials. But he said he did not view either man as a security risk, indicating he would not object if they are sent to a minimum-security facility.

Former prosecutor David Gourevitch, however, said there were no facilities in the state system comparable to federal minimum security prisons such as the one where media entrepreneur Martha Stewart spent her jail time.

"In the federal system, outside of maximum security places, generally people are physically safe. I don't think anybody would say that about New York state prison," Gourevitch said. "And from a state perspective, this is one of the longest sentences in a corporate fraud case that I can recall."

Kozlowski, 58, and Swartz, 44, were convicted in June after a four-month trial on 22 counts of grand larceny, falsifying business records, securities fraud and conspiracy. It was their second trial; the first ended in mistrial after a juror said she received threats following reports that she made an "okay" signal to the defense team.

Kozlowski and Swartz are the latest executives sentenced to prison in a wave of white-collar scandals that shook corporate America and outraged investors, employees and retirees after thousands of people lost their jobs and pension nest-eggs.

Former WorldCom chairman Bernard Ebbers was sentenced to 25 years in prison for the $11-billion accounting fraud that toppled the telecommunications company that emerged from bankruptcy as MCI Inc. Adelphia Communications Corp. founder John Rigas was sentenced to 15 years in prison for his role in the looting and fraud at the cable TV company. His son and former finance chief, Timothy Rigas, got 20 years.

Enron Corp. founder Kenneth Lay, former CEO Jeffrey Skilling and former top Enron accountant Richard Causey are expected to go to trial in January.

At Monday's sentencing hearing, Assistant District Attorney Owen Heimer asked the judge to impose the maximum 15 to 30 years, saying Kozlowski "should not be shown any leniency."

"He stole. He committed fraud. He committed perjury," Heimer said. "He engaged in a shocking spree of self-indulgence."

But Kozlowski asked the judge to be as "lenient as possible" and to consider "all the positive things I have done in my life."

Kozlowski's lawyer said he would ask an appeals court to grant bail pending his appeal.

Swartz also asked for leniency, and his lawyer, Charles A. Stillman, said he was a man of "remarkable decency."

Kozlowski and Swartz were accused of giving themselves more than $150-million in illegal bonuses and forgiving loans to themselves, besides manipulating the company's stock price.

The jury deliberated 11 days before returning 22 guilty verdicts out of 23 counts for each defendant. Each was acquitted of a count of falsifying records about company loans for homes in Boca Raton.

Kozlowski, employed by Tyco from 1975 until 2002, and Swartz, who joined Tyco in 1991 and left in 2002, testified that they never stole anything from Tyco or received anything from the company to which they were not entitled.

Tyco, which has about 250,000 employees and $40-billion in annual revenue, makes electronics and medical supplies and owns the ADT home security business. Nominally based in Bermuda, its operations headquarters are in West Windsor, N.J.

--Information from the Washington Post was used in this report.

[Last modified September 20, 2005, 01:54:19]