Former Tyco International Ltd. (TYC:US) Chief Executive Officer L. Dennis Kozlowski said he was “completely responsible” for the crimes that led to his 2005 conviction for looting the company -- even though he initially believed he hadn’t done anything wrong.
Kozlowski, 67, told the New York state Board of Parole at a Dec. 3 interview that he didn’t plead guilty in the case because he had convinced himself he wasn’t involved. The panel the same day agreed to free Kozlowski on Jan. 17 after he finishes the minimum term of his 8 1/3-to-25-year sentence.
“Subsequently, as I thought about it and sat in jail for a long time, I know I was involved and I rationalized, you know, that I wasn’t, but I was involved with the crime,” Kozlowski told the board, according to a transcript provided today by the Department of Corrections and Community Supervision. “I stole money from Tyco, and I’m completely responsible for it.”
Alan Lewis, an attorney with Carter Ledyard & Milburn LLP representing Kozlowski, didn’t immediately return a telephone message left at his office seeking comment on the interview. Svenja Schulz, a Tyco spokeswoman, declined to immediately comment in a phone interview.
Kozlowski became the face of corporate greed when the government pointed to luxuries he 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-Auguste Renoir.
Jurors at his trial in New York State Supreme Court in Manhattan 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.
The jury found that Kozlowski and ex-Chief Financial Officer Mark Swartz, 53, stole about $137 million from Schaffhausen, Switzerland-based Tyco in unauthorized compensation and made $410 million from the sale of inflated stock. They were both sentenced 8 1/3 to 25 years in prison. The U.S. Supreme Court rejected Kozlowski’s appeal of his conviction in October.
Kozlowski told the parole board that he and Swartz paid themselves bonuses for three or four years that weren’t authorized by Tyco’s directors. When asked what he did with the money, he said he didn’t take any of it out of the company.
“Well, a lot of money was left in deferred income in the company, so the company had over a hundred million dollars of deferred income that was not made to me,” Kozlowski said. “It was put there for future use. While I was stealing the money, I was not taking it out of the company. It sat in the deferred income account where it sits to this day.”
When asked why he got involved, Kozlowski told the board he had fallen into what he called a “CEO bubble” and began to believe that he was “more valuable” than he was, according to the transcript.
“The company was ranked number one in a lot of surveys, number one out of 500 companies most admired in Fortune Magazine, and I started believing it,” Kozlowski said at the hearing. “It was wrong, and I just -- it was greed, pure and simple.”
Kozlowski told the board that “not a moment” goes by that he doesn’t think about his family, his friends and everyone that was involved.
“I can’t say how sorry I am and how deeply I regret my actions many years ago,” Kozlowski told the board.
Kozlowski had sued the parole board in October 2012 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 sent the decision 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 in July overturned Huff’s ruling, saying the denial of parole was “rational.”
Kozlowski told the parole board his actions hurt the company, employees and many people around him, and that he tried to make up for it by selling his homes and liquidiating his investments to pay restitution. When asked whether he understood that it may take Tyco more than seven years to recover the funds he stole, he said the company is “healthy” today.
“The company does well, and while I stole money, you know, from Tyco, and I’m guilty of that, unlike other companies at that time, nobody lost their 401(k)s or anything like that,” Kozlowski said. “It’s not like Enron. That does not diminish my crimes and what I did, but, you know, nobody lost their investments. In fact, Tyco is doing better today and has over the last 10 years than it ever has before.”
Tyco hired Ed Breen to take over as the stock hit an eight-year low of $8.25 in 2002 after Kozlowski was forced out. By November 2003 the company had taken more than $8 billion in writedowns, restatements and charges. The company was split twice under Breen, once in 2007 and again last year, resulting in Tyco, Covidien Plc, TE Connectivity Ltd. and ADT Corp. Pentair Inc. bought the flow-control business.
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, New York, according to state records.
He told the board he participates in a work-release program, as a clerk for a company that provides software to help veterans and former offenders and others find employment. He said he has been out of Lincoln since July and checks in with his counselor at the facility twice a week and visits his parole officer every other week. He lives in an apartment with a woman, but the location of his residence, the woman’s name and his relationship with her were redacted in the transcript. Kozlowski and his second wife, Karen, divorced in 2008.
Kozlowski agreed to submit to substance abuse testing and not drink alcohol, according to the department. He also consented to complying with court orders imposing fines, surcharges and restitution and won’t act in a fiduciary duty or have a checking, savings, debit or credit card account without his parole officer’s permission, according to the department.
Swartz, who is on a similar work release program at Lincoln, was granted parole in October and also has a tentative release date of Jan. 17. Swartz in May of 2012 sued Tyco, seeking to recover $60 million he said he’s owed under agreements he made with the company when he stepped down in 2002.
To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at
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