Ex-Tyco executives sentenced to prison

Former Tyco International Chief Executive Dennis Kozlowski outside New York State's Supreme Court. Picture / Reuters

Dennis Kozlowski and Mark Swartz, former top Tyco International executives who were found guilty of stealing more than US$150 million ($216.7 million) from the company, were each sentenced today to 8-1/3 to 25 years in prison.

The men, who will be able to apply for parole to avoid serving the full 25 years, were immediately taken into custody after the sentencing and whisked out of the courtroom in handcuffs.

Former chief executive Kozlowski, 58, and chief financial officer Swartz, 45, were each found guilty in June of 22 counts of grand larceny, conspiracy, fraud and falsifying business records -- a big victory for prosecutors pursuing wrongdoing in corporate America. Kozlowski and Swartz have vowed to appeal the verdicts.

Manhattan Supreme Court Judge Michael Obus also ordered the men to pay restitution to the company of around US$134 million combined. Kozlowski was also fined US$70 million and Swartz was fined US$35 million by the state.

Both Kozlowski and Swartz briefly addressed the judge before the sentencing. Kozlowski said he recognized he faced jail time but asked the judge to "please be as lenient as possible."

Earlier, Kozlowski attorney Stephen Kaufman said to the judge that his client, once one of the most powerful chief executives in the United States, "is a good man. He is a decent person. His reputation has been tarnished, but his life should not be destroyed."

During the trial, prosecutors said Kozlowski and Swartz stole millions of dollars from Tyco and used the money to buy pricey artwork, throw lavish parties and furnish a fancy Manhattan apartment for Kozlowski with a US$6,000 shower curtain and a US$15,000 umbrella stand.

Each man had faced as much as 30 years in prison and as little as 1 to 3 years each. Prosecutors had asked for the maximum sentence for both.

Kozlowski committed larceny and fraud on an "unprecedented, staggering scale," said prosecutor Owen Heimer. He said the jury verdict showed that Kozlowski perjured himself when he took the stand in his own defence.

"The defendant absolutely refuses to take any responsibility for his actions," Heimer said.

Kaufman asked the judge for a fair sentence and to consider his client's charitable works in areas such as education and children's health care, seeking to counter prosecutors' contention that Kozlowski only gave to causes that furthered his self interests.

Legal experts said the men could have faced even stiffer sentences if they had been prosecuted in federal court, as in the cases of former WorldCom chief executive Bernard Ebbers and Adelphia Communications Corp founder John Rigas.

In July, a Manhattan federal judge sentenced Ebbers to 25 years in prison. Rigas, who is 80 and in poor health, was sentenced in June to 15 years in prison, also in Manhattan federal court.

While the ex-Tyco executives are looking at "a long period of time to serve in jail, it would have been a lot longer if they had been prosecuted in federal court," said Steven Peikin, a former US prosecutor who now is an attorney at law firm Sullivan & Cromwell.

That is because judges in the state system have more leeway in determining prison terms and because defendants convicted in state court can be eligible for parole, something not possible in the federal system, Peikin said.

With parole, Kozlowski and Swartz could even end up serving less than 8 years in prison, he said.

"You could conceivably see them out of prison in six to seven years," he said.

Neither man displayed any emotion when they were handcuffed and led out of the courtroom. After sentencing, defendants usually are taken to Riker's Island to await transfer within several weeks to a permanent state facility.

Kaufman said he would be filing an appeal to attempt to keep Kozlowski out of prison pending appeal. Swartz's lawyer, Charles Stillman, said he would be filing similar papers.

- REUTERS