- The Washington Times - Sunday, September 28, 2003

NEW YORK (AP) — One defendant is a former chief executive whose reputed greed came to symbolize the scandals that wracked Wall Street. The other is a former banking star accused of ordering key documents destroyed.

Former Tyco chief Dennis Kozlowski and banker Frank Quattrone go on trial today less than a block apart in Lower Manhattan — the first major trials since white-collar corruption erupted into the headlines last summer.

Although the charges against each man are different — Mr. Kozlowski is accused of grand larceny, Mr. Quattrone of obstruction of justice — both trials will be watched closely by the financial community.



“The investing public feels like it has been trampled on by Wall Street,” says Christopher J. Bebel, a former Justice Department prosecutor. “And it has a thirst for vengeance that has not been quenched at this point.”

Mr. Kozlowski and former Tyco financial chief Mark Swartz, who will be tried with him, are accused of turning the conglomerate into their personal piggy bank — looting it to the tune of $600 million.

Reports after Mr. Kozlowski was charged in September 2002 showed he spent company money at will on high art and furniture — from a $6,000 shower curtain to a $15,000 antique umbrella stand.

In one well-known incident, Tyco picked up half the tab for a $2 million birthday party for Mr. Kozlowski’s wife in Italy that featured musician Jimmy Buffet and an ice sculpture of Michelangelo’s David.

Besides lavish salaries and perks, Mr. Kozlowski and Mr. Swartz arranged to be paid $84 million in unauthorized bonuses, Manhattan prosecutors say.

Both men have pleaded not guilty. The pair are expected to argue that the millions of dollars they are accused of stealing were actually loans and bonuses approved by the board and disclosed to outside auditors.Last week, the judge who will hear the case overruled prosecutors who said the argument should not be allowed, calling it “rhetoric and sophistry” that Mr. Kozlowski and Mr. Swartz could sell to an unsophisticated jury. The ruling was considered an important victory for the defense.

The key to acquittal will be convincing a jury that the board knew about the compensation, and that Mr. Kozlowski worked hard to improve Tyco and deserved the pay, said Robert D. Zatorski, a former New Jersey white-collar crime prosecutor.

“You have to show that he, in fact, deserved the accouterments of wealth,” Mr. Zatorski said. “There’s a big difference between being wealthy and being a criminal.”

The trial, at state Supreme Court in Manhattan, is expected to last several months. Mr. Kozlowski, 56, and Mr. Swartz, 43, each could get 30 years in jail if convicted on grand larceny and other lesser counts.

The Quattrone obstruction trial, just down the street at a federal courthouse, features simple evidence and is expected to last two to three weeks.

Mr. Quattrone was an influential investment banker at Credit Suisse First Boston during the 1990s. At the height of the dot-com boom, he was paid tens of millions of dollars a year to help take technology companies public.

He is accused of encouraging CSFB employees to get rid of documents sought by a grand jury and regulators looking into how CSFB doled out shares of initial public offerings.

The government says Mr. Quattrone deliberately obstructed justice on Dec. 5, 2000, when he distributed an e-mail proposed by one of his subordinates that urged workers to “catch up on file cleaning before the holidays.”

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