High-living CEO stole from Tyco, jury finds

Extravagant lifestyles
The defendants were accused of enriching themselves by nearly $600 million by taking unauthorized pay and bonuses, abusing loan programs and selling their company stock at inflated prices after lying about Tyco’s finances.

Often, prosecutors said, the defendants hid their alleged thefts by failing to disclose the bonuses and forgiven loans in company declarations and federal filings, and bought the silence of underlings with outsized compensation.

Both used Tyco’s money to fund extravagant lifestyles of fancy art, jewelry and real estate, prosecutors said — particularly the gaudy $2 million party Kozlowski threw for his wife Karen’s 40th birthday on Sardinia. Tyco paid about half the party’s cost.

Just 'not thinking'
Lawyers for Kozlowski, with Tyco from 1975 until 2002, and Swartz, who joined Tyco in 1991 and left in 2002, said the executives believed they were acting lawfully when they accepted compensation and loan forgiveness or spent Tyco’s money. There was no criminal intent by either man, they said, and therefore there were no crimes.

A major difference in the second trial was four days of testimony by Kozlowski, who did not testify in the first. He told the jury he never abused Tyco loan programs or received a bonus to which he was not entitled, and that he never stole anything.

Kozlowski, asked by defense attorney Kaufman why a $25 million bonus he received from the company never appeared on his 1999 tax return, said he could not explain why.

“I just was not thinking when I signed my tax return that I had a $25 million loan forgiveness,” Kozlowski said. “Year in and year out at Tyco, my tax returns for the most part had been correct. I didn’t pick up on it.”

Swartz’ lead lawyer, Stillman, offered his closing argument’s theme as a slogan for jurors to deliberate by: “No criminal intent means no crime.”

Prosecutors called Kozlowski’s explanation for this omission and for other actions by him and Swartz “ludicrous,” and “despicable.”

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