20 September 2005

How sweet it is: fighting American greed in this century.

A state judge on Monday sentenced former Tyco International Ltd. executives L. Dennis Kozlowski and Mark H. Swartz to 8 1/3 to 25 years in prison for looting the company of hundreds of millions of dollars to pay for lavish parties, luxurious homes and extravagances. In June, a jury found former Tyco chief executive Kozlowski, 58, and former chief financial officer Swartz, 45, guilty of criminal counts of grand larceny, conspiracy, securities fraud and eight of nine counts of falsifying business records.

In a case that came to symbolize corporate greed, state Supreme Court Judge Michael J. Obus also ordered Kozlowski and Swartz to pay nearly $240 million in fines and restitution. Kozlowski and Swartz were immediately taken into custody and led from a packed courtroom in handcuffs as family members of both men sobbed. The men are likely to serve at least part of their sentences in one of New York's 16 maximum-security state prisons.

The sentences for Kozlowski and Swartz follow lengthy terms meted out to other white-collar defendants convicted in a wave of criminal cases that followed the collapse of the Internet bubble and multibillion-dollar frauds at companies such as WorldCom Inc. and Enron Corp.

Former WorldCom chairman Bernard J. Ebbers, 64, was sentenced to 25 years in prison for orchestrating an $11 billion accounting fraud at his company.

John J. Rigas, the 80-year-old founder of Adelphia Communications Corp., received 15 years in prison for stealing millions from the cable company for personal extravagances, hiding more than $2.3 billion in debt and lying to investors. Rigas's son and former Adelphia chief financial officer Timothy J. Rigas was given 20 years in prison for his role in the scheme.

Prosecutors and many shareholder groups say long sentences are necessary to deter future abuses and restore investor confidence. There is no parole in the federal system, under which many other white-collar defendants have been tried and sentenced.


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