New York – Former Tyco International chief executive L. Dennis Koz lowski stared forward and sat motionless Monday when a New York judge sentenced him to eight to 25 years in prison for siphoning hundreds of millions of dollars from the company.
The same was true for co-defendant Mark Swartz, the company’s one-time financial chief.
Kozlowski, convicted in June for his role in the theft of $170 million from Tyco and improperly manipulating shares to cash out $430 million in options, appeared to have expected a sentence in line with the recent spate of corporate-executive convictions.
Two months ago, a federal court sentenced Bernie Ebbers, the former WorldCom CEO convicted for his part in an $11 billion accounting fraud, to 25 years in prison. Earlier in the year, John J. Rigas, the 80-year-old former chairman of Adelphia Communications, was sentenced to 15 years while his son Timothy was given 20 years. All three remain free on bail.
“For white-collar criminals, it’s a whole new world,” said Arthur Jakoby, a former Securities and Exchange Commission prosecutor who is now a partner with Herrick, Feinstein in New York. “The sentences are getting tougher and tougher. The old clubby atmosphere in which judges looked the other way when sentencing corporate executives is long gone.”
Kozlowski, 58, also was ordered to pay $97 million in restitution and $70 million in fines. Swartz, 45, was ordered to pay $37 million in restitution and $35 million in fines.
Kozlowski attorney Stephen Kaufman said he would appeal the conviction.
The two men were convicted of grand larceny, securities fraud, conspiracy and falsifying documents. Together, they stole $170 million by arranging unauthorized bonuses and company loans.
They were also convicted of lying about Tyco’s financial health to investors in order to pump up its share price and cash in on $430 million in stock options.
Kozlowski’s looting was best symbolized by a party celebrating his wife’s 40th birthday on the Italian island of Sardinia. Videotape of the $2 million party showed waiters in togas filling glasses with vodka that poured off an ice sculpture in the form of Michelangelo’s David.
Corporate convicts
Tyco’s L. Dennis Kozlowski and Mark Swartz were sentenced Monday to a total of $239 million in fines and restitution and up to 25 years each in prison. Other recent corporate-fraud sentences:
Adelphia
John Rigas 15 years
Timothy Rigas 20 years
Credit Suisse First Boston
Frank Quattrone 18 months, $90,000 fine
Rite Aid
Martin Grass 8 years, $500,000 fine
WorldCom
Bernard Ebbers 25 years, $11 billion fine
JOHN WENZEL
