Ex-Tyco Lawyer Refutes Fraud Charges at Trial
NEW YORK – Mark Belnick (search), Tyco International Ltd.'s (TYC) former general counsel, addressed jurors at his fraud trial for the first time Tuesday, denying charges he tried to hide millions of dollars in loans from the company's board of directors.
At times choking back emotion, Belnick described for jurors the 26 years he worked as a lawyer before joining Tyco as its top legal counsel in 1998.
It was at Tyco, prosecutors charge, that Belnick committed securities fraud and grand larceny in receiving about $32 million in loans and payments without authorization from Tyco's board.
Among those loans and bonuses was a roughly $4.5 million relocation package given to him by then-Chairman Dennis Kozlowski (search) to move into Manhattan from the suburbs upon joining the conglomerate.
Belnick told jurors that Kozlowski first brought up the relocation loan during a lunch meeting in the fall of 1998.
"Mr. Kozlowski was nothing if he wasn't decisive. He said, 'I want to make you an offer. I want you to take the job'."
Passing Belnick a pen and a napkin, Kozlowski offered him a three-year deal with a base salary of $700,000, a $300,000 signing bonus, stock and options along with guaranteed bonuses over the life of the contract, according to the testimony.
Belnick said Kozlowski then told him: "You mentioned that you would be interested in moving to Manhattan. Well, the company will help you do it. We'll give you an interest-free relocation loan to buy an apartment in Manhattan."
Belnick then testified that he "wouldn't have had the nerve to ask for this much. It was a very, very generous offer."
The former general counsel said he discussed the details of the loan with Mark Swartz (search), Tyco's finance chief at the time. He said at least another half-dozen employees knew about the loans, as did the company's outside auditor.
Belnick also testified that he never tried to hide the loan -- used to purchase an apartment overlooking Central Park that "looked like it had been bombed" -- from the company's board.
"During my entire tenure at Tyco, no director ever asked to see my compensation agreement, no director ever asked to see my pay package," he said. "But they most assuredly knew I wasn't working for free."
Belnick was then asked if he was ever concerned about the propriety of the pay agreement.
"I was dealing with the chairman of the board of the company. The answer is no."
Still, Belnick failed to disclose the relocation loan on questionnaires that directors were required to complete for regulatory filings.
Belnick testified that Swartz, the finance chief, told him the loans did not need to be disclosed.
Belnick faces up to 25 years in prison if convicted of the most serious charge, grand larceny.