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                                                 Commentary 
Former CEO Kozlowski convicted, faces 25 years.

After the first trial ended in a mistrial, when one juror was improperly contacted during deliberation, a second jury convicted Tyco's ex-CEO Dennis Kozlowski and former CFO, Mark H. Swartz, of defrauding nearly $600 million from the company to finance opulent lifestyles.

Kozlowski and Swartz were accused of taking unauthorized pay and bonuses, abusing loan programs and selling their company stock at inflated prices after lying about Tyco's finances. The duo were convicted of grand larceny, falsifying business records, securities fraud and other charges. Both are free on $10 million bail apiece pending an Aug. 2 pre-sentencing hearing. They each face up to 30 years in prison.

Kozlowski became the object of ridicule after it was revealed that the furnishings at his Manhattan apartment included a $6,000 shower curtain and other extravagances that brought the price of the place to more than $30 million. Why not? It wasn't his money.

Just how much of the assets will they be forced to return? Given the track record of government prosecutors, it will likely be fractions of the amount defrauded. Why should Kozlowski's estate benefit from ill gotten gains ? Perhaps prosecutors should learn to be more aggressive in going after assets much like their counterparts at the Internal Revenue Service ("IRS"). The IRS is notorious to trying to collect in full all past due amounts plus compounded interest starting from the time the incident first occurred. Why not place a lien on all assets and try to recoup the entire $600 million plus an additional $20 million in annual interest penalties from the time of the first infraction? In my opinion, it's the only logical option.

Updates after September 19, 2005:

Former Tyco CEO Dennis Kozlowski and former Tyco CFO Mark H. Swarz were each sentenced up to 25 years in prison. Both are eligible for parole after 8 years and 4 months.
 
2005 Nelson Chin.
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Other Commentaries:

Former Computer Associates CEO faces new indictment. Could auditors have detected the fraud ?

Adelphia and ex-CEO Rigas to settle fraud case.

Arthur Andersen Conviction Overturned: Too Little Too Late.


Worldcom's Ebbers faces $30 Million Fine and life in prison.


Russian Oil Tycoon Mikhail Khodorovsky: Guilty of Fraud and Victim of Politics?

Accounting Giant KPMG Probed for Unlawful Conduct.

Former CEO of HealthSouth Scrushy acquitted.


Former Tyco CEO Kozlowski convicted, faces 30 years.

Outgoing TOYS R US CEO's Favorite Toy? The Golden Parachute.

Sayanora Citigroup. Japan shuts down Private Banking Unit.

Heist at the Bellagio or plot twist for the New Ocean's Eleven sequel?

Eisner versus Ovitz. The Showdown in Tinseltown.


Marsh sinks deeper in insurance scandal.

Managers disconnected at Verizon.

What is Martha stuffing in her stocking this holiday season?

Is Apprentice Street Smart Candidate a College Graduate?


Outsourcing Employees - coming soon.

Samples of Written Policies:

Conflicts of Interest v1
Conflicts of Interest v2
Conflicts of Interest v3

Audit Committee v1

Regulatory:

Sarbanes-Oxley Act of 2002

Final Arthur Andersen Alumni Letter

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