NEW YORK – The retrial of L. Dennis Kozlowski (search) and Mark Swartz (search), the two top Tyco International (TYC) executives accused of stealing $600 million of company money to finance lifestyles of gaudy excess, is set to begin next week.
Legal experts say prosecutors should, and probably will, focus less on items like the $6,000 gold-threaded shower curtain bought with company money and concentrate more on the alleged thefts.
Kozlowski and Swartz's first trial was aborted after six months last year by a menacing letter and telephone call to a juror.
Prosecutors have told the judge they expected to present a shorter, leaner case against Kozlowski, Tyco's former chairman and chief executive officer, and Swartz, the former finance chief. They expect it to last a little more than four months.
In the first trial in Manhattan's State Supreme Court, prosecutors gave jurors a videotaped look at the $2 million birthday party Kozlowski threw for his wife on a Mediterranean island, and a video tour through his $18 million Fifth Avenue apartment.
Jurors were told Kozlowski spent some $11 million of Tyco's money to furnish the apartment with amenities such as a $4,050 tablecloth and a $515 toaster. There was also a $2,900 set of hangers, a $4,995 custom-made blue-and-gold bedskirt, and a $2,665 blue velvet pillow.
And those were the little things.
The jurors also saw a Persian rug that cost $191,250, a George I walnut arabesque clock that set Tyco back $113,750, an Ascherberg grand piano that cost $77,000, and a pair of French antique stools, bought for $125,000.
The prosecutors' videotapes, which included scenes shot aboard Kozlowski's yacht, "Endeavour," sometimes made the proceeding seem more like an episode of "Lifestyles of the Rich and Famous" than a larceny trial.
Prosecutors from Manhattan District Attorney Robert Morgenthau's (search) office said at the time that the extravagances demonstrated the defendants' greed and showed where some of the money they allegedly stole ended up.
While the prosecutors have refused to say how they might pare the evidence at the retrial, legal experts say too much attention to the defendants' spending is what they should avoid.
John Coffee, a Columbia University Law School professor who specializes in white-collar crime, said after the first trial that prosecutors "could maybe put their case on an extreme diet and, 'Keep it simple, stupid.'"
Kozlowski, 58, and Swartz, 44, are charged with grand larceny, falsifying business records, conspiracy and business law violations.
Prosecutors said the defendants stole $170 million by hiding unauthorized bonuses and secretly forgiving loans to themselves, and pocketed an additional $430 million by pumping up Tyco stock by lying about the state of the company's finances.
Defense lawyers said Kozlowski and Swartz earned every penny they got from Tyco.
Kozlowski said after a court appearance earlier this month that he was apprehensive about the retrial.
"There's still a concern (about the outcome)," he said.
The trial judge, Justice Michael Obus, has already thrown out the top charge in the original indictment — enterprise corruption. That count suggested that Kozlowski and Swartz had conspired with others to turn Tyco into a criminal enterprise.
If convicted of the current top charge, first-degree grand larceny, and the other more serious counts, the defendants each face up to 30 years in prison.
Tyco, which has about 270,000 employees and $36 billion in annual revenue, makes a wide range of products including electronics, medical supplies and security devices. It is nominally based in Bermuda but has its operations headquarters in West Windsor, N.J.
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