NEW YORK – Lawyers for two former Tyco International Ltd. executives charged with looting the conglomerate of millions of dollars complained in court Tuesday that the defendants are having trouble posting bail.
The lawyers said their clients' personal assets have been frozen, and the money offered by relatives and others has been rejected by prosecutors as possible proceeds of the crimes with which they are charged.
Last week, State Supreme Court Justice Michael Obus set bonds of $100 million for L. Dennis Kozlowski, 55, Tyco's former chief executive officer, and $50 million for Mark Swartz, 42, the corporation's former chief financial officer. The judge gave both until Thursday to post 10 percent of their bonds as security.
Stephen Kaufman, Kozlowski's lawyer, said his client's ex-wife, Angie, had agreed to put up her $10 million house in Greenwich, Conn., or $10 million in municipal bonds as bond security. Assistant District Attorney John Moscow described both as "possibly attributable to the course of conduct" charged in the indictment.
"We have made every reasonable effort to satisfy the bond that your honor set," Kaufman told the judge.
Moscow replied; "It doesn't seem appropriate that the proceeds of the crime should be used as bail. All we want to know is if the bail is the proceeds of the crime."
The restraining order Obus issued last week keeps Kozlowski from using his assets anywhere in the country for his bond, Kaufman said. The lawyer said outside court that it is legally questionable whether a New York judge has that authority.
Swartz's lawyer, James Mitchell, told the judge; "We find ourselves in essentially the same situation as Mr. Kaufman."
Mitchell said his client's wife had offered property she and the defendant owned jointly.
Moscow told Obus that given the employment history of Swartz's wife; "It is quite obvious that that the source of the funds is the defendant."
Obus said it appeared to him that some of the bond collateral offered by the defendants might not be subject to his restraining order. He told the defense to return Thursday, post the security, and if Moscow objects, the court will hold a hearing on whether it is acceptable.
Kaufman said outside court that his client's problem is not a lack of money.
"He's got more assets than Custer had Indians," the lawyer said, but he can't get to them. "He can't even go to an ATM."
Kozlowski and Swartz were charged last week with enterprise corruption and grand larceny for alleged stealing some $600 million from Tyco. They face up to 25 years in prison on each of those charges if convicted.
Tyco's former general counsel Mark Belnick, 55, was charged at the same time with falsifying business records to cover up $14 million in improper loans. He faces up to four years in prison.
Prosecutors filed criminal charges against the men soon after the Securities and Exchange Commission accused them of hiding huge loans and other money they allegedly took out of Tyco, which is based in Bermuda but headquartered in New Hampshire.
The SEC said Kozlowski used $242 million from an employee loan program, established to help workers buy Tyco stock, to pay for yachts, fine art, jewelry, luxury apartments and vacations.
Kozlowski had already been indicted in June on charges of evading New York sales taxes on $13 million in art, including works by Renoir and Monet. He resigned from Tyco in June a day before being indicted. He has pleaded innocent in that case.
Tyco makes everything from coat hangers to security systems and medical devices