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The Traitorous Tyco Scandal: Sentencing Of L. Dennis Kozlowski And Mark Swartz

3512 words - 15 pages

The Traitorous Tyco Scandal:
Sentencing of L. Dennis Kozlowski and Mark Swartz

Business Law 447-A
Written By:
Lindsey Proffitt
White collar crime is not a victimless crime, and affects many people. These crimes can devastate a company, force investors to lose billions of dollars, and destroy people’s life savings. Through L. Dennis Kozlowski’s and Mark Swartz’s scandal reported in 2002, the Tyco Company lost over $28 billion dollars in debt. However, the biggest lash came to its shareholders who lost over $90 billion. The Tyco two were tried and found guilty in 2005, and are currently serving a 25- year- sentence. Crime never pays and it is only a matter of time before one is ...view middle of the document...

However, this was considered a separate trial from the famous Kozlowski and Swartz case. Walsh took the plea deal from the State, and plead guilty to securities fraud. His crimes came when he received a $20 million kickback from Tyco for brokering a deal between his friend and Tyco. As part of his plea agreement, he repaid the monies and was fined 2.5 million dollars. Also, he can never serve on the board of a publically traded company.
Criminal Justification- “The Motive”
The motives behind these types of “white collar crimes” vary, but the top influencers seem to be criminal gain for individual profit (aka: greed.) Also, that these offenses can be difficult to detect, and fly under the radar for many years. The sin of gain in money and power entices with an inescapable magnetism to these criminals who commit wrongdoings; they feel they owe it to themselves to take the money. This places them under the category of criminal negligence. The textbook states that as explained by Black’s Law Dictionary, this is “a degree of carelessness amounting to a culpable disregard of rights and safety of others; it is criminal conduct that is not intentional, but wrongful since one failed to act with the reasonable care that is expected under the circumstances.”(Meiners, pp 120).
“The Scheme”
Dennis Kozlowski, Mark Swartz, and Mark Belnick were all highly paid top executives at the Tyco Company. Kozlowski and Swartz ran the Tyco business from 1990 to 2002; quite a long time to bask in these lavish illegally spent luxuries before being caught in 2003. All three were paid salaries well into the millions of dollars. However, they wanted more.
The focus of this paper will shift towards Kozlowski and Swartz, since Belnick was acquitted. We will discuss that briefly later on. According to CNN Money, “Kozlowski and Swartz were accused of taking bonuses worth more than $120 million without the board of director’s approval, and misrepresenting the company’s financial condition to investors to boost the stock price while selling $575 million in stock. (Crawford. P.1).
CNN money goes further into detail of these criminal’s lavish lifestyles to show examples of how they spent their embezzled money. The article states that, “Kozlowski expended $2 million dollars on a birthday party for his wife, as well as a $6,000 shower curtain.” (Crawford, P.2). Mr. Kozlowski’s also purchased expensive one of a kind artwork pieces that came from transferred funds out of a “stock loan plan” that was intended to help executives’ pay taxes on stock awards. He also stole from the employee relocation program designed to help workers afford the adjustment from relocating within the business. Yet, in Kozlowski’s and Swartz’s minds, they feel these extravagances were acceptable. They stated that the company was aware of these expenses, and gave the money to them for their wages. A chairman for the board stated that “the wording of the stock plan could be interpreted to allow the funds...

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