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Greed Denied in Tyco Trial

Ex-Chairman L. Dennis Kozlowski turned down $30 million in stock options, defense says in $600-million fraud case.

October 08, 2003|From Reuters

Former Tyco International Ltd. Chairman L. Dennis Kozlowski is not the poster boy for 1990s-style corporate greed and once refused $30 million in stock options, his defense lawyer said Tuesday.

"You can't be greedy if you're refusing large sums of money," defense lawyer Stephen Kaufman said during his opening statement in a Manhattan courtroom.

But lawyers for Kozlowski and Mark Swartz, Tyco's ex-finance chief, said their clients did not loot $600 million from the conglomerate.

The defendants, who have pleaded not guilty to the 37-count indictment, face as many as 30 years in prison if convicted of the top count of enterprise corruption.

The attorneys described the men as hard workers who ran the company in the plain view of Tyco's board of directors and the company's outside auditor, PricewaterhouseCoopers.

Kaufman described Tyco's board as Kozlowski's biggest fan, cheering him on as the company's shares skyrocketed in the late 1990s.

"All they would do is say: 'Go for it, Dennis,' " Kaufman said. "They were a cheerleading squad for Dennis."

Kaufman said Tyco's board did not expect to receive a bunch of details from Kozlowski, saying it gave the green light to his many concepts for running the company and rewarding employees.

Kaufman said Kozlowski, 56, turned down $30 million in stock options offered by Tyco's board of directors in 1999.

Charles Stillman, the lead lawyer for Swartz, said his client's compensation was "all lawful, all authorized." Kozlowski's compensation topped $100 million in some years and Swartz usually got about half what Kozlowski received.

Earlier in the day, Assistant Manhattan Dist. Atty. Kenneth Chalifoux cast Kozlowski and Swartz in a different light, saying they lied, stole and cheated for several years in an "intricate, well-thought-out charade."

"These two didn't win the jackpot," Chalifoux said. "They stole it."

Chalifoux laid out the case against Kozlowski and Swartz, exhaustively detailing the 35-count indictment against the men that includes enterprise corruption, securities fraud, grand larceny and falsifying business records.

The two executives, while building Tyco into one of the world's largest manufacturing conglomerates, raided Tyco's assets to buy homes, yachts, jewelry and paintings, Chalifoux said.

"The company was doing well. The stock was doing really well," Chalifoux said. "When things are going well people don't often ask questions."

But Kaufman, who referred to Kozlowski as "Mr. Tyco," told the court: "My client is neither a liar, a cheat or a thief."

He chronicled how Kozlowski worked his way through college and later worked long hours as a Tyco executive.

Once Kozlowski became Tyco's top officer, the company grew through a dizzying array of acquisitions engineered by the top two executives.

Kaufman said Kozlowski was Tyco's "outside man," a concept-oriented executive who left details to Swartz, the "inside man."

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