This then allowed him to collude with the directors of committing a list of criminal activities including fraud, corruption and bribery and allowed him to get away for such a long period of time. The directors needed Kozlowski to be convicted for a number of reasons, not the least of which was a half billion dollar golden parachute the company would owe Kozlowski if he was found not guilty. Swartz, 42, his financial adviser and second-in-command, are accused of using the money to pay for everything from an apartment on Park Avenue and homes in Boca Raton, Fla. In addition to talking with Kozlowski, I gathered a mass of information—the transcripts of both of his criminal trials the first ended in a mistrial which totaled more than 28, pages, the evidence presented during the trials, SEC filings, hundreds of articles, financial statements, judicial decisions, and interviews with former Tyco insiders, including directors, CEOs, and other executives.
He has also been charged with tampering with evidence by removing a fraudulent cargo document from a file that was turned over to the Manhattan district attorney's office during its investigation of the case. I also spoke with Robert Morgenthau, the former Manhattan District Attorney who prosecuted Kozlowski and with the foreman of the jury that convicted him. The SEC asked Kozlowski, Swartz, and Belnick to restore the funds that they took from Tyco in the form of undisclosed loans and compensations.
So, the question was not whether the bonuses were earned, and not whether the amounts were correct, but whether the board of directors authorized the bonuses before they were paid, which was required under the policy. In exchange, the board member received financial benefits.
The investigation ended with the SEC deciding to take no action. What Did Tyco's Auditor Know?. This created a situation where Kozlowski has nobody to answer to, and the directors were all appointed by him and were on favourable terms with him. The men then covered their tracks by limiting the scope of internal audits and bypassing the company's legal department when filing disclosure documents with the Securities and Exchange Commission, the indictment says. Kozlowski was the main actor in the financial troubles and legal battles in this case. Also, Kozlowski tried to avoid paying sales taxes for his art purchases because doing so would raise red flags for authorities.
However, the meeting minutes were completely unreliable. The New York grand jury indictments -- including the charge against the former general counsel, Mark Belnick, 55, who was an investigator in the Senate's Iran-contra hearings in -- also accuse Mr. By September of , all three Kozlowski, Swartz, and Belnick were gone and charges were filed against them for failure to disclose information on their multimillion dollar loans to shareholders.
Prev NEXT Tyco Background Tyco International has operations in over countries and claims to be the world's largest maker and servicer of electrical and electronic components; the largest designer and maker of undersea telecommunications systems; the larger maker of fire protection systems and electronic security services; the largest maker of specialty valves; and a major player in the disposable medical products, plastics , and adhesives markets. Kozlowski was involved in numerous financial transactions that were not included in the financial reports of the company. Liman's deputy at those hearings. Thus, he was able to easily carry out the fraud without much suspicion.