Risk Management

It’s Years More Jail for the “Tyco Two”

Ex-CFO Mark Swartz and ex-CEO Dennis Kozlowski, in the slammer 3 years now, lose appeals of convictions that carried 8-1/2- to 25-year sentences.
Stephen TaubOctober 16, 2008

It looks like former Tyco International Ltd. chief executive Dennis Kozlowski and former chief financial officer Mark Swartz will be in the slammer for many years more, after all.

The New York State Court of Appeals upheld their criminal convictions today, according to Reuters. In a written decision, the court rejected the former executives’ arguments that their trials were flawed and that the convictions should be overturned.

In 2005, a jury found Kozlowski and Swartz guilty of 12 counts of grand larceny, fraud, and other charges. They were accused of stealing more than $150 million from the company.

Each man was sentenced to 8-1/2 years to 25, and they have now already served three years in prison.

Kozlowski apparently misses the limelight. Earlier this month, he sent a letter to the Fox Business Network in which he commented about the current turmoil in the global financial markets.

“In my opinion there are a number of reasons we are in such a mess,” he said in the letter. He said that the two men had been bamboozled (a word he spelled wrong in the letter) by Wall Street, and asserted that those who know better led others into believing that there are shortcuts to making “mountains of money overnight.”

Said Kozlowski in his letter: “As we’re seeing now, this is not only impossible, but it also destroys what was built over lifetimes.” He added at that time that many on Main Street had an urge to live in bigger, nicer houses, and that financial institutions were happy to satisfy that urge with easy credit.

The former CEO even blamed regulators for imposing mark-to-market accounting back in the 90s.

“Now we must pay the price,” he added. “I hope I don’t sound holier than thou. At one time I enjoyed the good things in life as much as anyone else. But the way it was done since I left business in 2002 is honestly frightening to me.”

Swartz was the subject of a Portfolio magazine profile in September 2007.

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