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Last Updated: Tuesday, 7 October, 2003, 17:25 GMT 18:25 UK
Tyco pair 'stole the jackpot'
Dennis Kozlowski
Prosecutors are set to focus on Mr Kozlowski's lavish lifestyle
Two Tyco executives accused of taking $600m (361m) from the company to fund lavish lifestyles, spent the money like lottery winners but "didn't win the jackpot, they stole it", a court has heard.

In opening arguments at the Manhattan trial, prosecutor Kenneth Chalifoux said former boss Dennis Kozlowski and ex-finance director Mark Swartz raided the company's bank accounts then lied about it.

Mr Koslowski, 51, and Mr Swartz, 45, face charges of theft, enterprise corruption and lesser offences - including filing false business records and conspiracy.

However, lawyers for the pair argue they were being properly rewarded for building Tyco into one of the world's largest companies.

Prosecutors say the pair stole $170m by claiming unauthorised compensation and made a further $430m on their Tyco shares by lying about the firm's financial condition between 1995-2002.

"These defendants were trusted with the assets of their company, and they abused that trust," Mr Chalifoux said.

If found guilty the pair could face up to 30 years in jail.

Rewards 'earned'

Mr Kozlowski's defence is expected to be built around the argument that Tyco's board and auditors were aware of how funds were being used, meaning that it was not fraud.

His lawyer, Stephen Kaufman has said that while his client made more than $100m in a year "he earned all of it".

Under Mr Kozlowski's management, the Bermuda-based Tyco became an international conglomerate through a string of undisclosed acquisitions.

The firm has now been forced to restate its accounts for every year since 1998.

In Mr Kozlowski's trial, prosecutors are set to dwell on the defendant's notoriously lavish lifestyle, and his alleged spending sprees in the run-up to the trial.

They claim he used company money to buy a string of goods, including a $15,000 umbrella stand, $6,000 shower curtain and $2,200 waste basket.

Tax charges

Prosecutors also have video footage of an infamous $2m birthday party on the island of Sardinia - partly funded by Tyco - which featured an ice sculpture of Michelangelo's David squirting vodka into crystal glasses.

Mr Kozlowski resigned following personal tax evasions charges over the sale of six paintings, including a Monet.

The tax evasion case will not be heard until after trial, which is expected to last several months.

Meanwhile, Mr Swartz is accused of using millions of Tyco dollars for personal investments and real estate speculation.

Prosecutors claim he worked with Mr Kozlowski to take millions from the firm in improper bonuses and loans which he did not have to repay.




SEE ALSO:
Tyco trial tests the waters
29 Sep 03  |  Business
Broker charged over Tyco links
29 May 03  |  Business
Tyco finds new accounting hole
30 Apr 03  |  Business
Tyco sues ex-finance chief
13 Mar 03  |  Business
Tyco votes to stay offshore
06 Mar 03  |  Business
Tyco inquiry finds no major fraud
31 Dec 02  |  Business
New Tyco boss rallies the troops
25 Sep 02  |  Business
US firm ditches tax dodge
02 Aug 02  |  Business


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