Under way: Mr. Enniscorthy goes on trial
In this story, Mark Swartz plays second fiddle to former Tyco colleague Dennis Kozlowski. But in Albemarle real estate lore, his status is secure as the highest payer for any county property– nearly $18 million for the plush historic estate Enniscorthy. And as far as we can tell, he still owns it.–editor
One defendant is an ex-CEO whose alleged greed came to symbolize the scandals that have 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 went on trial Monday, September 29, less than a block apart in lower Manhattan in the first major trials since white-collar corruption erupted in the headlines last year.
And while the charges against each man are different– Kozlowski is accused of grand larceny, 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.''
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 Kozlowski was charged last September 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 Kozlowski's wife in Italy that featured musician Jimmy Buffet and an ice sculpture of Michelangelo's "David."
Besides lavish salaries and perks, Kozlowski and Swartz arranged to be paid $84 million in unauthorized bonuses, Manhattan prosecutors say.
Both men have pleaded innocent. The two are expected to argue that the millions 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 Kozlowski and 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 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,'' 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. Kozlowski, 56, and Swartz, 43, could each get 30 years in jail if convicted on grand larceny and other lesser counts.