It’s hard to keep track of all the former top executives on trial this week without a court docket.
Last week, high-profile trials stemming from the spectacular collapses of Tyco International, WorldCom, HealthSouth, and Parmalat got under way.
In the retrial of former Tyco chief executive officer Dennis Kozlowski and former finance chief Mark Swartz, a prosecutor alleged the executives systematically looted the conglomerate by stealing more than $150 million from shareholders, according to Reuters.
New York Assistant District Attorney Owen Heimer said they stole that amount by taking company loans and having them forgiven and through undeserved bonuses, the wire service added.
Heimer also reportedly asserted that the defendants earned more than $575 million by selling Tyco stock and fraudulently inflating the company’s share price.
The defense said that accusations by board members that the two former executives stole more than $150 million were part of a self-serving strategy to protect themselves from shareholder lawsuits, according to the New York Times.
“The directors are concerned about their pocketbook,” Kozlowski’s lawyer, Stephen Kaufman, said, calling their contentions “revisionist history,” according to the paper.
The Times suggested that Swartz’s lawyer might be trying to pit his client against Kozlowski when he said, “You must consider the evidence for each man separately.”
In the trial against former WorldCom CEO Bernard Ebbers, former controller David Myers testified that his ex-boss worried during a 2001 meeting that all he had worked for “will basically be wiped out” because of the company’s sliding stock price, according to the Associated Press.
He also reportedly testified that Ebbers told executives at the meeting that “extraordinary things had to be done” to turn the company around.
Myers pleaded guilty to fraud and conspiracy in 2002, and agreed to cooperate with the government in exchange for the possibility of a lighter sentence. Last Thursday Myers testified that Ebbers apologized in 2000 after company accountants were forced to cover up more than $800 million in expenses, according to the AP.
The former controller also testified that Ebbers pushed for the company to project 15 percent revenue growth for 2001, when his CFO was comfortable with only 9 percent to 12 percent, the wire service reported.
Ebbers is charged with fraud and conspiracy and accused of orchestrating an estimated $11 billion fraud.
In Birmingham, Ala., former HealthSouth co-founder and CEO Richard Scrushy is facing charges of masterminding a $2.7 billion fraud. Scrushy’s lawyers, however, assert he was kept in the dark by 15 former executives who have pleaded guilty for related crimes.
Former CFO Aaron Beam testified last week that in a meeting with Scrushy in July 1996, he and controller Bill Owens told the CEO that even using the most aggressive accounting maneuvers wouldn’t prevent HealthSouth from missing its earnings projections for the quarter, according to USA Today.
Beam testified that Scrushy said, “We’re not going to report these numbers. You guys need to go back and fix the numbers,” according to the paper. Beam added that after the meeting, Owens offered to work late with his group. The next morning, he said, HealthSouth’s numbers were in line with Wall Street expectations, according to the paper.
Meanwhile, in Italy, the trial of Maurizio Bianchi and Lorenzo Penca, two of Parmalat SpA’s ex-auditors from Grant Thornton’s former Italian office, began, according to AP.
In the first trial since the huge fraud was uncovered in late 2003, both individuals are charged with market rigging, providing false accounting information, and blocking the work of Italian stock market regulator Consob, the wire service added.
They proceedings are a fast-track trial, which allows a reduced sentence if a defendant is convicted, AP reported.