Former Tyco International chief executive Dennis Kozlowski and finance chief Mark Swartz have been found guilty by a Manhattan court of stealing more than $150 million (€122 million), giving prosecutors pursuing the recent wave of corporate scandals one of their biggest victories to date.
Kozlowski and Swartz were each found guilty of 22 counts of grand larceny, conspiracy, fraud and falsifying business records. Both former executives were found not guilty on one charge of falsifying documents.
The two were grim-faced but stoic as the convictions were read. Kozlowski's wife had tears in her eyes.
"We are disappointed and will deal with this on appeal," said Swartz's attorney, Charles Stillman.
Kozlowski's lawyer, Stephen Kaufman, affirmed that his client would also appeal.
Both men could be sentenced to 25 years in a state prison on the most serious charge of grand larceny. Judge Michael Obus set a follow-up hearing for August 2nd to discuss sentencing.
Swartz and Kozlowski will remain free on bail and are not considered a flight risk, according to the judge.
"This verdict is an endorsement of the principle of equal justice under the law," said Manhattan District Attorney Robert Morgenthau. "Crimes committed in corporate offices will be treated according to the same standards as other crimes."
The Tyco scandal included lurid details of how Kozlowski used company money to support an extravagant lifestyle, including a $2 million birthday party that he threw for his wife in Sardinia, and the purchase of a $6,000 shower curtain and a $15,000 umbrella stand for his $18 million Manhattan apartment.
He became a symbol of corporate excess when the series of scandals broke in 2001-2002, leading to the introduction of the tough corporate reform law the Sarbanes-Oxley Act.
Besides accusations of stealing more than $150 million in secretly forgiven loans and undeserved bonuses, Kozlowski and Swartz were accused of defrauding shareholders by selling $575 million in Tyco stock while misrepresenting the company's finances.
This is the second time the two men, who are largely credited with building Tyco into one of the world's biggest manufacturing conglomerates, were tried on allegations that they misused company funds.
The first case ended in a mistrial last year when a juror reported receiving a telephone call and a threatening letter about the case during deliberations. That juror, Ruth Jordan, was in the courtroom for the verdict, as she has been periodically during the second trial.
"From what I've seen of the second trial, I still think they are not guilty," she said after the verdict.
The jury of six women and six men returned their verdict on the 11th day of deliberations. Afterwards, they left in a van from the courthouse and said nothing as reporters shouted questions at them.
The trial in the state supreme court in Manhattan lasted more than four months.
The verdict is the latest in a string of government prosecutions aimed at convicting corporate chieftains of boardroom wrongdoings.
In March, former WorldCom chief executive Bernard Ebbers was found guilty of masterminding an $11 billion fraud that forced the telecommunications company into bankruptcy.
A jury in Birmingham, Alabama, is still deliberating the fate of former HealthSouth chief executive Richard Scrushy, who is accused of orchestrating a $2.7 billion accounting fraud.
The government has yet to start its case against former Enron executives, including former chairman Kenneth Lay and chief executive Jeffrey Skilling.
