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'Greed Is Greed,' Tyco Jury Is Told

March 17, 2004|Walter Hamilton | Times Staff Writer

NEW YORK — Despite being among the best-paid businessmen in America, two former executives of Tyco International Ltd. stole millions from the company to buy everything from yachts to opulent Manhattan apartments, a prosecutor said in closing arguments Tuesday.

L. Dennis Kozlowski, Tyco's deposed chief executive, and Mark Swartz, the former finance chief, took the money because they wanted to impress their friends and because their enormous salaries didn't cover their even grander tastes, said Ann Donnelly, a prosecutor in the Manhattan district attorney's office.

"While these defendants were making money, they were spending money hand over fist," Donnelly told jurors.

"Being wealthy has never been an impediment to stealing. Greed is greed."

Kozlowski and Swartz are charged in New York state court with stealing $170 million in loans that weren't repaid and bonuses that were never approved, and making $430 million by selling Tyco shares whose value was fraudulently inflated by their actions. Each defendant faces more than 25 years in prison if convicted.

Both have pleaded not guilty. Their attorneys argue that the corporate payouts were granted by the board, even though six former directors disputed that contention in court testimony.

The trial has drawn attention because of the large sums of money involved and because it is the first in an expected series of cases in which juries will decide whether once-revered executives enriched themselves at the expense of their companies.

During trial, prosecutors laid bare the details of Kozlowski's extravagant lifestyle, which included a now-infamous $2-million birthday bash for his wife on the Italian island of Sardinia, for which Tyco picked up half the tab.

Kozlowski's lawyer, Stephen Kaufman, argued Monday that the men were being tried only because the government was trying to show it was being tough on suspected corporate villains -- and that the two executives made easy targets because of their wealth.

Between 1998 and 2002, Kozlowski made $300 million at Tyco. In 2002 alone, Swartz's compensation totaled $136 million, according to Fortune magazine.

Donnelly immediately addressed that issue Tuesday morning.

"To argue to you that the defendants are on trial because they're rich is ridiculous," Donnelly said. "They're here because they put themselves here."

Donnelly mixed humor into her daylong summation, and it seemed to have the intended effect as jurors listened intently and seemed to laugh on cue.

At one point, she noted that Tyco paid for several homes for Kozlowski and Swartz.

"Don't these guys have credit cards?" she asked with mock exasperation. "Don't these guys have checkbooks?"

Donnelly said there would have been nothing wrong with the $250,000 fee that was paid to singer Jimmy Buffett to perform at the Sardinia party -- if Kozlowski hadn't made it a corporate expense.

"You can have Elvis impersonators parachuting in," she said. "Just pay for it yourself."

Kaufman said Monday that the various payouts were detailed in Tyco's corporate ledgers and therefore not a crime because "criminals act in criminal ways."

Donnally played on that theme by saying, "corporate criminals act in corporate criminal ways."

Kozlowski and Swartz tried to block any disclosure of their free-spending habits by paying generous salaries to key executives and, in some cases, by buying homes for them, Donnelly said.

Donnelly also criticized a crucial defense argument that a key director authorized the payouts before he died of cancer.

"It is the desperate act of two men who have no credible explanation for what they did," Donnelly said.

The jury is expected to get the case this week.

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