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20 Sep 2005 08:53
Former Tyco International chief Dennis Kozlowski and his top lieutenant, Mark Swartz, were each sentenced to up to 25 years in prison in New York on Monday for looting the company of hundreds of millions of dollars.
The two men, who stood accused of using the conglomerate as a personal piggy bank to purchase real estate and yachts and to pay for lavish parties, will serve a minimum of eight years and four months in jail, at which time they will become eligible for parole.
Kozlowski and Swartz, who were convicted in June of illegally taking about $600-million from the company coffers, were also ordered by the New York State Supreme Court to pay fines and restitution.
Kozlowski (58) was fined $70-million and Swartz (44) $35-million. Kozlowski was ordered to pay $97-million in restitution and Swartz $37-million.
Prosecutors had sought a 30-year term for each, with parole available after 15 years.
Kozlowski and Swartz, Tyco’s former chief financial officer, were convicted in June of grand larceny, fraud, falsifying business records and other charges.
The jury took nearly 11 days of deliberations to reach their verdict.
It was the second trial for Kozlowski and Swartz. The judge declared a mistrial after the first trial in April last year, citing “outside pressure” on the jury.
Prosecutors charged the pair with stealing $150-million from Tyco and procuring a further $430-million by overtly selling shares while artificially inflating the value of the stock.
Kozlowski was the latest top United States corporate official to be charged as part of a crackdown on corporate wrongdoing in the wake of scandals at Enron, Adelphia, WorldCom and elsewhere.
WorldCom chief Bernard Ebbers was sentenced to 25 years in prison in July, while Adelphia cable founder John Rigas (80) was sentenced to 15 months in prison the previous month. Both Ebbers and Rigas were sent to federal prisons, while Kozlowski and Swartz will spend their sentences in state institutions, where the conditions are much more harsh.
Tyco, headquartered in Bermuda for tax reasons, fired Kozlowski after being forced to restate its results to show a multibillion-dollar loss.
The company makes a range of products across the security, health-care and electronics sectors, and has been streamlined under its new leadership.
Kozlowski had become a symbol of corporate excess, with the tabloid press revelling in the details of his misuse of company funds, such as spending $15 000 on a “dog umbrella stand” and $6 000 on a shower curtain.
The first trial jury was also shown a video of a $2-million toga party—half of it funded by Tyco—that Kozlowski threw for his wife on the Italian island of Sardinia.
The second trial offered less in the way of sensational evidence, with both the prosecution and defence slimming down their presentations following criticism of the way they handled the original trial.—AFP
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