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In the first of the closing arguments in the five-month trial of the two former top executives of Tyco International Ltd., the lawyer for former Chief Financial Officer Mark Swartz said Monday the prosecution’s case was based on the “quantity” of its evidence, not the “quality.” “They threw a lot of charges against the wall, hoping some would stick,” said Charles Stillman of Stillman & Friedman. “It didn’t work. A 10-pound slab of clay is a 10-pound slab of clay.” Swartz and former Tyco Chief Executive Officer L. Dennis Kozlowski are charged by the Manhattan district attorney’s office with grand larceny, falsifying business records and several other counts for allegedly taking more than $170 million in unauthorized bonuses and loans. Manhattan Supreme Court Justice Michael Obus dismissed enterprise corruption charges against both men Friday. Passionate at times and aggressive throughout, Stillman Monday sought to punch holes in the prosecution’s case by depicting Swartz’s actions as unremarkable and completely legal in the context of Tyco’s day-to-day operations. Stillman told the jury that Tyco executives’ compensation was certainly high but was in line with a corporate culture where “pay for performance” was the prevailing ethos. “There’s no dispute that Tyco was doing very well,” he said. In that context, Stillman said, it was ludicrous for the prosecution to contend that Swartz “stole” his compensation. In one instance, he said, both Kozlowski and Swartz had taken less than they were entitled to so other Tyco employees could also receive substantial bonuses. The defense lawyer also noted that the board granted Kozlowski considerable authority, and that Swartz relied on that authority in, for instance, authorizing a $20 million “investment banking fee” to former Tyco board member Frank Walsh in connection with Tyco’s 2001 acquisition of the CIT Group Inc. The disclosure of the payment to Walsh led to a 2002 internal investigation at Tyco and, subsequently, the resignations of both Kozlowski and Swartz. Throughout the course of his day-long summation, Stillman addressed each of the major bonuses that Swartz received and reminded the jury that the executive had testified himself about meetings with board members at which compensation issues were discussed. Several board members have testified for the prosecution that they did not know about the two executives’ compensation, and none of the meetings Swartz testified about were memorialized. Stillman told the jury he anticipated the prosecution would make much of that fact in its summation. “The DA and the directors’ position is if it’s not recorded in the minutes, then it didn’t happen,” said Stillman. “That is not the evidence in this case and that is not the reality.” Swartz, who testified for more than a week, was the only defense witness after months of prosecution witnesses. Following his testimony, the prosecution called prominent litigator David Boies, whose firm Boies, Schiller & Flexner conducted the 2002 internal investigation, as its sole rebuttal witness. Monday, Stillman lashed out at Boies and said the prosecution’s decision to call him to rebut Swartz — rather than any of the Tyco directors or employees who had testified earlier — demonstrated the weakness of their case. “[Mr. Boies] came here in a futile effort to salvage what was left of a failed case,” said Stillman. The defense lawyer noted that Boies Schiller is representing Tyco in civil litigation against Kozlowski and Swartz and has already earned more than $30 million for its work on behalf of the Bermuda-based conglomerate. He accused also Boies of ongoing cooperation with the prosecution. In a statement that drew an objection, Stillman said that calling Boies to testify was akin to calling one of the prosecutors. Stillman stressed several times that Swartz had made no effort to conceal his activities from board members, auditors, employees or “anyone else who might ask.” The executive’s actions did not show the requisite criminal intent for conviction, Stillman told the jury. Kozlowski’s team, led by Stephen Kaufman, is expected to begin its closing arguments today, with the prosecution to follow.

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