Saturday, June 18, 2005
The former CEO of Tyco International, Dennis Kozlowski, as well as CFO Mark Swartz are convicted of taking more than $600 million from the company. Charges include grand larceny, securities fraud, conspiracy, and falsifying business records.
The first trial ended in a mistrial after one juror received a threatening letter. Nancy Salomon says of the second trial that the “Defense was counting on the jury not reaching a verdict; they had used their challenges during the jury selection process to kick almost every potential juror who had a college degree, or had any business experience or Wall Street experience off the jury … they were hoping that this case was just going to be too confusing for the jury.” While the jury did take 11 days to arrive at their decision, they found Kozlowski and Swartz guilty on 22 of the 23 counts. To combat the aggressive jury selection strategy undertaken by the defense, the prosecution “basically gave the jury several credit hours worth of an MBA“, teaching them about following paper trails and detecting falsification of business records. It paid off during deliberation as the jury requested over 100 documents to review.
Kozlowski and Swartz directly stole approximately $150 million USD from Tyco and acquired $430 million more by inflating the company’s stock value and then secretly selling company shares. Bail was set at $10 million each. The two former executives face a minimum of eight years in prison, up to a maximum of 25 years. In addition, Kozlowski is accused of evading $1 million in sales taxes on six paintings that he bought in 2001 in a separate New York State case, and Swartz faces tax evasion charges in New Hampshire. If convicted in these cases as well, they would face up to 30 years in prison.