Kozlowski Admits Omissions in Filings

Tyco International Ltd. ex-Chief Executive L. Dennis Kozlowski, on trial on charges of leading a massive fraud, said Thursday that he was “ultimately responsible” for company filings that omitted millions of dollars in compensation.

Assistant Manhattan Dist. Atty. Ann Donnelly showed jurors Tyco filings that didn’t note more than $100 million in payments to Kozlowski and other executives. Kozlowski said he signed some of the documents, including those filed with the Securities and Exchange Commission. He added that he didn’t prepare many of them.

“Where did the buck stop?” Donnelly asked during cross-examination in New York state court in Manhattan. “The buck stops with me with everything at Tyco,” Kozlowski said. He later testified that a personal assistant handled his finances.

The testimony supported the prosecution’s contention that Kozlowski, 58, purposely withheld information from investors. He and ex-finance chief Mark Swartz, 44, are accused of awarding themselves and other executives $150 million in cash, Tyco shares and loan forgiveness without board authorization.

The two are charged with securities fraud for allegedly hiding the company’s condition from investors while selling $575 million in shares and options at inflated prices.

In a tactical shift from his first trial, Kozlowski took the stand Wednesday as the first witness for the defense. He repeatedly told the jury of six men and six women that he never intended to commit any crimes at Tyco.

The former CEO didn’t testify at his first trial. Swartz’s decision to take the stand during that prosecution backfired, jurors said, persuading many to vote to convict him. Swartz’s lawyers haven’t said whether he will testify in the retrial.

Jurors in the first prosecution, which ended last April, said they were 11 to 1 in favor of conviction on some counts when New York State Supreme Court Justice Michael Obus, who presides over this trial, declared a mistrial after the holdout juror reported receiving a threat. The holdout juror, Ruth B. Jordan, attended the trial Thursday for the second day in a row.

Donnelly asked Kozlowski about the financial latitude he had as CEO.

“Tyco’s money was not your money to spend on yourself as you please, was it?” she asked.

“That’s right,” he said.

Donnelly displayed Tyco’s 1999 financial statement, focusing on the Key Employee Loan Program. Kozlowski used loans to buy art and to pay expenses unrelated to the plan’s purpose of paying taxes when employees’ Tyco shares vest.

Kozlowski conceded that he used the loans for purposes other than paying taxes. Earlier he said the loan program wasn’t restricted to paying taxes and that other Tyco executives had used it to buy boats and homes.

Kathleen McRae, his personal financial assistant, was responsible for deciding when to borrow from the loan program on his behalf, Kozlowski said.

“I asked Kathy to make the decisions as to whether the funds would come from my account or the funds would come from my Key Employee Loan account,” he testified.