- The Washington Times - Sunday, March 7, 2004

NEW YORK (AP) — After five months of testimony, jurors begin hearing closing arguments today in the trial of two former top executives at Tyco International Ltd., former Chief Executive Officer L. Dennis Kozlowski, and Mark H. Swartz, the conglomerate’s ex-chief financial officer.

On Friday, State Supreme Court Justice Michael Obus threw out a count of enterprise corruption, one of the most serious against the two. That charge, punishable by up to 25 years in prison, accused the defendants of creating an organization specifically to commit crimes.

Mr. Kozlowski said outside court that the judge’s dismissal of the charge was “a positive” thing, but added that he remained uneasy. “Of course I’m nervous,” he said.

The enterprise corruption statute was modeled after the federal Racketeer Influenced and Corrupt Organizations Act, often used to prosecute organized crime gangs.

The jury still will consider charges of grand larceny, falsifying business records and violating state business laws. The grand larceny charge — a “mega-larceny” under state law because of the purported theft of more than $1 million — also is punishable by up to 25 years in prison.

The summations are expected to take several days, so the jury is likely to get the case Thursday or Friday.

Prosecutors say Mr. Kozlowski and Mr. Swartz stole $170 million from Tyco by hiding unapproved pay and bonuses and by abusing loan programs.

The defendants also are accused of illegally making another $430 million by pumping up the value of Tyco stock through lies about the company’s finances.

Defense attorneys maintain that Mr. Kozlowski and Mr. Swartz stole nothing and earned all the money. They say the appropriate people — members of the board of directors, internal and outside auditors — knew about all pay, bonuses or forgiven loans.

Prosecutors say millions of dollars went to finance baronial lifestyles, fund personal investments, and silence some employees who were in positions to expose the defendants. Some of the trial’s 47 witnesses and 700-plus exhibits were presented to demonstrate these assertions.

Tyco, which has about 270,000 employees and $36 billion in annual revenue, makes electronics and medical supplies and owns the ADT home-security business.

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