NEW YORK -- Former Tyco International Ltd. Chief Executive Officer L. Dennis Kozlowski and former finance chief Mark Swartz "systematically looted" the company of more than $150 million in bonuses, prosecutors said yesterday as the two executives' fraud trial began.
"This case is about how ... the two defendants stole $150 million from a company named Tyco," Assistant District Attorney Owen Heimer told jurors in his opening statement in the retrial of the two men. "Unknown to the investing public, they were systematically looting that company."
Kozlowski, 58, and Swartz, 44, are accused of stealing unauthorized bonuses and loans and of defrauding shareholders of more than $400 million by selling stock they inflated by misrepresenting Tyco's financial condition. Their first trial ended in a mistrial. Both deny wrongdoing.
Heimer, speaking in state court in Manhattan, opened by enumerating a series of payments by Tyco to the defendants totaling more than $150 million which the two "falsely called" bonuses.
"These thefts were not a $150 million mistake, not a $150 million misunderstanding," Heimer told the six men and six women.
Jurors will begin hearing testimony Monday.
Kozlowski and his lawyer, Stephen Kaufman, declined to comment during a break in the trial. Charles Stillman and Michael Grudberg, Swartz's lawyers, also declined to comment.
The first trial lasted six months. It ended in a mistrial in April after a juror told New York Supreme Court Justice Michael Obus that she had received a threatening letter. The juror previously had been identified by name in news reports as the lone holdout on a jury that was leaning toward conviction.
Swartz and Kozlowski face 31 counts of stock fraud, falsifying business records, grand larceny and conspiracy. The most serious charge carries a 25-year prison term.
The government dropped a charge of enterprise corruption that was heard at the first trial and dropped one larceny count against the two in relation to a bonus paid to former General Counsel Mark Belnick in 2000.
Belnick, who was tried separately and acquitted in July, was paid a $2 million bonus and granted 200,000 Tyco shares after the termination of an inquiry by the Securities and Exchange Commission into Tyco's accounting practices. The total value of the bonus was $12 million.
Tyco is the world's biggest maker of security systems and industrial valves. The company is based in Bermuda and run from West Windsor, N.J.
Kozlowski presided over more than $64 billion in acquisitions in his last five years as chief executive. Kozlowski and Swartz left the company in 2002.
Prosecutors have said the case might last four months.