Tyco’s Kozlowski Should Be Denied Hearing, Board Says

Former Tyco International Ltd. (TYC) Chief Executive Officer L. Dennis Kozlowski shouldn’t be given a new parole hearing because his crimes were too serious to allow his release from prison yet, parole officials told a court.

Mark Shawhan, an attorney for the New York Attorney General’s Office, today asked a panel of five appellate judges in Manhattan to overturn a ruling granting Kozlowski a new hearing before the state’s Board of Parole, saying the former Tyco executive stole more than $100 million from his company.

“His crime was so severe that to grant him parole on his first appearance before the board would undermine respect for the law,” Shawhan told the appeals court at a hearing.

Kozlowski was sentenced to 8 1/3 to 25 years in prison in 2005 after a jury trial in Manhattan. He began serving his sentence in September of that year. The parole board denied Kozlowski’s request for parole in April 2012 “due to concern for the public safety and welfare.”

Kozlowski sued in October, saying the board relied on erroneous information in determining its ruling. State Supreme Court Justice Carol Huff in February annulled the decision and sent it back for a new hearing.

The parole board “relied exclusively on the seriousness of petitioner’s crime in reaching its determination,” Huff said in her decision.

‘Irrational’ Decision

Alan Lewis, an attorney with Carter Ledyard & Milburn LLP representing Kozlowski, told the panel that the parole board’s decision was “irrational.”

“They plugged in a number from the news and used that as a rationalization for what was really a foregone conclusion,” Lewis said.

Kozlowski will get a parole hearing in September unless the appeals court orders a new hearing at which the board grants parole before then, Lewis said.

Kozlowski became the face of corporate greed when the government pointed to luxuries paid for with Tyco funds including a $30 million Fifth Avenue apartment with a $6,000 shower curtain, a $15,000 umbrella stand and paintings by Claude Monet and Pierre-August Renoir.

A jury in New York State Supreme Court in Manhattan found that Kozlowski and ex-Chief Financial Officer Mark Swartz stole about $137 million from Tyco in unauthorized compensation and made $410 million from the sale of inflated stock.

Birthday Party

Jurors saw a video of a $2 million birthday party Kozlowski threw for his wife on the Italian island of Sardinia in June 2001, financed in part by Tyco. The party featured an ice replica of Michelangelo’s “David,” with vodka flowing from its penis, and a concert by singer Jimmy Buffett.

Kozlowski was transferred in January 2012 to the minimum-security Lincoln Correctional Facility on 110th Street near Fifth Avenue in Manhattan from the medium-security Mid-State Correctional Facility in Marcy, according to state records.

Kozlowski, a 1968 graduate of Seton Hall University in New Jersey, started with Tyco as an assistant comptroller in 1976. He told the parole board he has paid $134 million in restitution and a $70 million fine in full. He said he sold his assets, including homes and a boat, “as quickly as possible” and has “very, very little left.”

‘Model Inmate’

Kozlowski has “conducted himself as a model” inmate since his incarceration, has never committed a disciplinary infraction and has completed every program offered to him, including an alcohol and substance abuse treatment program, he said in his lawsuit.

He served as a teacher’s aide for inmates pursuing high-school equivalency diplomas and was awarded “merit time” that reduced his minimum term, making him eligible for parole after serving seven years, according to the suit.

While the parole board said Kozlowski’s disciplinary record “appears clean” and he has made “progress and achievement,” it denied his request.

“Your instant offenses are the result of your theft of over $100 million from Tyco, an international public corporation, in glaring violation of the trust placed in you as CEO by the board of directors and corporate shareholders,” the board said in its decision.

Kozlowski in August settled a 10-year-old lawsuit with Tyco in which the company sought the return of money, stock and loans. Tyco, based in Schaffhausen, Switzerland, makes security systems.

Stepped Down

Swartz, 52, who is also serving an 8 1/3 to 25 year sentence, sued Tyco in May to recover $60 million he says he is owed under agreements he made with the company when he stepped down in 2002.

Swartz is also serving his sentence at Lincoln and participating in a work-release program, according to the website of the Department of Corrections and Community Supervision. He is eligible for parole in January and has a hearing scheduled for September.

The case is Kozlowski v. New York State Board of Parole, 104097/2012, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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