Securities Fraud

Trenton, NJ: (Apr-30-08) The state of New Jersey brought charges against Tyco International Ltd., alleging that the diversified manufacturer engaged in securities fraud involving the company's former management. The suit, filed in 2002, claimed that the company's pension fund suffered major losses due to fraud, including insider trading at Tyco. Allegations included accounting improprieties, stating that former Tyco executives failed to disclose millions of dollars in personal loans from the company. Named in the civil suit was former chief executive L. Dennis Kozlowski and former finance chief Mark Swartz, who are currently serving 8-1/3 to 25 years in prison. Court papers reveal that they were convicted of grand larceny, securities fraud and falsifying business records at Tyco to fund lavish lifestyles. It was alleged that the money was used to fund Kozlowski's $18 million apartment with a $6,000 shower curtain.

In a recent development in the case, company spokespersons said that Tyco has agreed to pay the state $73.3 million to resolve allegations. The state Attorney General's Office stated that the settlement agreement stipulated that Tyco pay the money to NJ's Division of Investment. The settlement comes the day before Tyco, which is nominally based in Bermuda but has operational headquarters in West Windsor, NJ, is to release its quarterly earnings report. In June 2007, the company split into the current Tyco International, popular for its ADT security system, plus Tyco Electronics Ltd. and health products company Covidien Ltd. Records show that the three companies are each contributing to the settlement. [NEWSDAY: TYCO INTERNATIONAL TO PAY NJ $73M TO SETTLE SECURITIES FRAUD.]

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Published on May-2-08