Accounting & Tax

Kozlowski, Swartz Sentenced

Tyco's former CEO and CFO will serve eight and one-third to 25 years in state prison.
Stephen TaubSeptember 19, 2005

Former Tyco International Ltd. chairman and chief executive officer Dennis Kozlowski and former chief financial officer Mark Swartz were each sentenced to eight and one-third to 25 years in state prison for stealing hundreds of millions of dollars from the conglomerate, according to reports.

Kozlowski was also fined $70 million and ordered to pay $97 million in restitution, according to The New York Times; Swartz was reportedly fined $35 million and ordered to pay $37 million in restitution.

New York State Supreme Court Justice Michael Obus rejected their request to remain free pending appeal and ordered both taken into custody, according to Bloomberg.

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“As the victim of the crimes that were prosecuted, we are gratified to see the court’s sentence hold the defendants accountable for their actions,” Tyco spokesman David Polk said in a statement, according to the wire service.

Kozlowski and Swartz’s first trial ended in April 2004 in a mistrial after one juror, who was holding out for acquittal, reportedly said that she had been threatened. In June of this year, their retrial ended in conviction on 22 felony counts each, including one dozen counts of grand larceny, Bloomberg noted. They were also convicted of defrauding shareholders of more than $400 million, according to the report.

Prosecutors had recommended the maximum sentence of 15 to 30 years in prison for Kozlowski. “He stole. He committed fraud. He committed perjury,” argued Assistant District Attorney Owen Heimer during court proceedings, according to the Associated Press. “He engaged in a shocking spree of self-indulgence,” he reportedly added, referring to tens of millions in company money Kozlowski spent on a Manhattan apartment, jewelry, artwork and an infamous birthday party for his wife.

Earlier this summer, former WorldCom CEO Bernard Ebbers was sentenced to 25 years in prison for his role in that company’s accounting scandal; his former CFO, Scott Sullivan, received a five-year sentence. Also this summer, Adelphia founder John Rigas was sentenced to 15 years in prison; his son Timothy, the former CFO, was sentenced to 20 years.

Unlike those defendants, noted the Times, Kozlowski and Swartz were tried and sentenced in state court, so they will be eligible for parole after one-third of the maximum duration — that is, eight and one-third years.

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