Trial near for 3rd ex-Tyco exec
USA Today, April 6, 2004
By Jayne O’Donnell and Greg Farrell
NEW YORK — The marathon proceedings against Dennis Kozlowski and Mark Swartz have finally reached their surprising conclusion, but the Tyco trials are far from finished.
Monday, a New York state judge is to begin hearing arguments in the case of Mark Belnick, the former general counsel who has not attracted nearly as much notoriety as his ex-bosses, but who also is accused of misappropriating millions of Tyco’s money.
Friday, a judge declared a mistrial in the headline-grabbing case of Kozlowski, the ex-CEO, and Swartz, the ex-CFO. Prosecutors could retry the two, who face up to 30 years in prison if convicted on the charges they looted Tyco of $600 million.
Belnick also faces the possibility of heavy prison time, though the amount of money involved in his alleged crimes is far less.
The Manhattan district attorney has charged Belnick with eight felony counts relating to a $12 million bonus and $14 million in loans he received from Tyco. The most serious charge is first-degree grand larceny, which alone could land Belnick in state prison for 25 years. He also is charged with one count of violating state securities fraud laws and six counts of falsifying business documents — counts that each carry maximum four-year sentences.
Experts say that if convicted, Belnick would likely serve far less than 25 years. He could avoid prison altogether if he is cleared of grand larceny. That is exactly what Belnick’s attorney, Reid Weingarten, says will happen. “No fair-minded jury will ever convict him,” he says.
As a well-respected Iran-Contra prosecutor and partner in the law firm Paul Weiss before joining Tyco, Belnick is cut from different corporate cloth than his former bosses. Both Kozlowski and Swartz are former auditors, Kozlowski having worked at a New Hampshire photocopier firm and Swartz coming from Deloitte & Touche when he joined Tyco in 1991.
What Belnick’s case lacks in color — there will be no videos of company-paid toga parties or talk of a $6,000 shower curtain — it might make up for with colorful legal sparring and revelations about a religious conversion.
Prosecutors have charged that Belnick benefited from an allegedly improper relocation loan from Tyco to build a second home in Park City, Utah.
It turns out that Belnick, once a conservative Jew, donated some of that money to a conservative branch of the Catholic Church known as Opus Dei. This was after Belnick quietly converted to Catholicism without telling his wife, parents or other family members.
Adding to the potential drama in the trial is that veteran New York state prosecutor John Moscow, a figure both revered and reviled in Manhattan legal circles, will try the case himself. Moscow has not tried a case since the early 1990s, when he led the prosecution of Washington lawyer Robert Altman, who was charged in the BCCI bank scandal. Altman was acquitted and the indictment of his mentor, attorney Clark Clifford, was dropped.
Lawyers knock heads
In a preliminary hearing before Judge Michael Obus two weeks ago, Weingarten and Moscow gave a preview of what to expect in coming weeks. They quickly went at it, with Weingarten complaining that Moscow has been “terrorizing” witnesses that he wants to call in defense of Belnick. Moscow argued that he’s simply doing his job, trying to determine what potential witnesses might say if called into court during the trial. He also questioned Weingarten’s professionalism.
Weingarten, a scrappy former federal prosecutor known for his wit and coarse language, also represents ex-WorldCom CEO Bernie Ebbers and Enron’s former chief accounting officer Rick Causey. He said it was the first time an adversary had criticized his professionalism. “I feel like I’m in the company of a grade school bully who hasn’t gotten his way,” he told Obus.
Moscow backed off, saying he “did not intend to impugn Mr. Weingarten’s professionalism.”
The colorful and sometimes contrasting personalities and antics of the players can obscure the fact that Tyco is a fairly simple story. The misdeeds are often lumped in with the corporate scandals of Enron and WorldCom, but with Tyco, there are no special-purpose entities or complicated accounting rules for jurors to wade through. White-collar defense experts say it’s either stealing or it’s not.
Belnick, for his part, either was authorized to accept a relocation loan that didn’t involve a work-related move — or at least wasn’t prohibited from doing so. He had the legal justification for accepting a $20 million bonus from Kozlowski — who might or might not have had the justification to give it to him — or he did not.
Former federal prosecutor Kirby Behre, now a white-collar defense attorney, says Belnick could benefit from the mistrial ruling for Kozlowski and Swartz.
“It’s created a situation that instead of the prosecution going in thumping their chests saying, ‘We got a scalp,’ potential jurors paying attention to the press for this trial” are aware that the question about criminal intent was never resolved, Behre says.
“It’s very hard to scrub that entirely,” Behre says.
Posted April 15, 2004