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2 former Tyco executives appeal New York convictions

2 former Tyco executives appeal New York convictions

The former chief executive of Tyco International Ltd., L. Dennis Kozlowski, and Mark Swartz, its former finance chief, filed appeals papers Tuesday saying they were wrongfully convicted of stealing hundreds of millions of dollars from the company.
The thrust of the filings at the state Supreme Court's Appellate Division is that the men, once two of the country's highest-paid executives, were convicted of what should have been a civil dispute between them and Tyco's board of directors.
They were prosecuted and convicted, the appeals papers say, largely because of the tenor of the times, because of financial scandals at former corporate giants including Enron and ImClone.
Kozlowski, 59, and Swartz, 46, were sentenced in September 2005 to sentences of 8 1/3 to 25 years in prison after being convicted of grand larceny, securities fraud, conspiracy and falsifying business records related to their taking $170 million (euro133.5 million) in unauthorized compensation and $430 million (euro337.6 million) by stock manipulations.
State Supreme Court Justice Michael Obus, who sentenced the men on Sept. 19, 2005, also ordered Kozlowski to pay $97 million (euro76 million) in restitution and a $70 million (euro55 million) fine. He told Swartz to pay $37 million (euro29 million) in restitution and a $35 million (euro27.5 million) fine.
Swartz's lawyers say he has paid everything he owes. Kozlowski's lawyers say their client has paid most of what he owes and is selling assets to get the rest.
Appellate briefs for both say lawyer David Boies, who investigated transactions by Kozlowski and Swartz at Tyco, should have been barred from testifying that he had concluded the two were guilty of the larcenies charged. Even if they were guilty, appeals papers say, the sentences the defendants received were excessive.
The appeals papers also complain that the trial judge quashed a subpoena for interview notes and memoranda created by other officers and directors of Tyco, a manufacturing conglomerate best known for its home alarm system, ADT Security Services. These notes and memoranda might have supported defense positions, the court papers say.
Kozlowski's lawyers said Boies' statement that Swartz told him that a $25 million (euro19.6 million) bonus to Kozlowski and a $12.5 million (euro9.8 million) bonus to him were "a mistake" should not have been evidence against Kozlowski but was.
Kozlowski also was authorized to buy art, real estate and other property for Tyco, his papers say. Because he had the authority and discretion to spend Tyco's money, or believed he did, he should not have been convicted, his papers say.
Kozlowski's papers also say prosecutors improperly alleged during the trial that the CEO illegally paid a $20 million (euro15.7 million) bonus to Frank E. Walsh Jr., a Tyco board member. Kozlowski's papers say he was authorized by the board to make the payment to Walsh and the board knew he had done it.
It was Walsh's demand for and receipt of the $20 million (euro15.7 million) investment banking fee for helping with the merger of Tyco and CIT Group Inc. that led to the end of Kozlowski's reign in 2002.
Walsh testified at trial that when other board members learned about the payment, they disapproved and demanded the money back. He said he refused at first to return it but gave it back so he could stay out of jail after being indicted.
Swartz' appeals papers contend that he should not have been convicted in connection with the Walsh payment or the art purchases.
Tyco International Ltd., which has more than 250,000 employees and $36 billion (euro28.3 billion) in annual revenue, makes a wide range of products including electronics and medical supplies. It is nominally based in Bermuda but has its operations headquarters in West Windsor, New Jersey.


Updated : 2021-04-10 20:36 GMT+08:00