Former Tyco execs face fraud charges
Last Updated: Thursday, September 12, 2002 | 5:49 PM ET
CBC News
The Manhattan district attorney's office filed criminal charges Thursday against Kozlowski, former chief financial officer Mark Swartz and former general counsel Mark Belnick.
The U.S. Securities and Exchange Commission also filed its own civil complaint against the three.
"The defendants put their own interests above those of Tyco's shareholders," SEC director of enforcement Stephen Cutler said. "Those shareholders deserved better than to be betrayed by the management of the company they owned."
Tyco says former CEO did 'serious harm' to company and its shareholders
Authorities say the Tyco trio used the company as their own private bank, stealing $170 million US directly from the company and obtaining another $430 million US through the fraudulent sales of securities.
Among the allegations – that Kozlowski diverted $242 million US to buy yachts, fine art and luxury homes. The SEC said the money came from an employee loan program which was supposed to help Tyco employees buy company stock.
Tyco's current management also filed suit against Kozlowski Thursday, seeking the return of more than $100 million US. The suit accuses its former CEO of misappropriating money and assets from the company and said he "engaged in a concerted pattern of conduct to conceal larcenous acts from the Board of Directors."
Tyco said Kozlowski gave himself unauthorized bonuses totaling $58 million US and unauthorized loans of more than $43 million US. It also accused him of "taking personal credit for more than $43 million in charitable donations that actually were made by Tyco."
A statement from Tyco said "the company has been damaged in an amount that far exceeds the amounts that Kozlowski directly misappropriated for himself."
"To hold him accountable for his misconduct, we seek not only full payment for the funds he misappropriated but also punitive damages for the serious harm he did to Tyco and its shareholders."
Tyco shares, which were at $60 US in January, were below $18 US on Thursday.
Kozlowski resigned as Tyco CEO earlier this year after he was charged with avoiding payment of over $1 million US in sales taxes on $13.2 million US in artwork.
Tyco is a multinational conglomerate with annual revenue of $34 billion US. Its best-known corporate brand is its ADT security and alarm division.
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