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Ex-Tyco CEO Kozlowski Denied New Parole Hearing by Court

Former Tyco International CEO L. Dennis Kozlowski
A file photo shows former Tyco International Ltd. Chief Executive Officer L. Dennis Kozlowski as he arrives at Manhattan criminal court in New York for his corporate accounting fraud trial during June 2005. Photographer: Adam Rountree/Bloomberg

July 2 (Bloomberg) -- Ex-Tyco International Ltd. Chief Executive Officer L. Dennis Kozlowski was denied a new parole hearing by a New York state appeals court in a reversal of a lower court’s ruling.

Kozlowski, 66, who was sentenced in 2005 to 8 1/3 to 25 years for looting the company, sued the parole board in August after it denied his request for early release due to “concern for the public safety and welfare.” State Supreme Court Justice Carol Huff in February annulled the decision and sent it back for a new hearing.

The state appealed, saying that Kozlowski’s crimes were too serious to allow his release from prison yet. A panel of five appellate judges in Manhattan today overturned Huff’s ruling, saying the denial of parole was “rational.”

“The record demonstrates that respondent considered the required statutory factors and adequately set forth its reasons for the denial, which include its conclusion that petitioner’s release would ‘tend to deprecate the seriousness of the instant offenses and undermine respect for the law,’” the appeals court said.

Alan Lewis, an attorney with Carter Ledyard & Milburn LLP representing Kozlowski, said he expects to ask the Court of Appeals in Albany, the state’s highest court, to reinstate Huff’s decision. Kozlowski is eligible again for parole in January and is scheduled for a hearing in September.

Appeal Planned

“We respectfully, but strongly, disagree with the Appellate Division’s decision and instead think that the lower court was entirely correct about the flaws in the parole board’s decision,” Lewis said in an e-mail. “The Appellate Division did not mention its own decision in Matter of King, the case the lower court relied on and which was at the center of the Appellate Division argument.”

Attorney General Eric Schneiderman’s office is pleased that the appeals court agreed that the parole board’s ruling is lawful and that Kozlowski, “like all other convicted felons, is being required to serve his sentence in accordance with New York laws,” Melissa Grace, a Schneiderman spokesman, said by e-mail.

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.

Millions Stolen

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.

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 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 a reduction in 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.

Board’s Reasons

“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.

Tyco, based in Schaffhausen, Switzerland, makes security systems.

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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