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The trial of former Tyco International Ltd. General Counsel Mark Belnick began Thursday with a prosecutor accusing him of abandoning “everything his training, education and prior experience had taught him” in pursuit of riches dangled before him by former Tyco Chairman L. Dennis Kozlowski. “He was that much in Dennis Kozlowski’s pocket, bought and paid for,” Manhattan Assistant District Attorney Amy Schwartz said in the prosecution’s opening statement. Belnick’s lawyer, Reid Weingarten, said his client had “at all times acted honorably and professionally” and had earned every cent of his lavish compensation. Tyco directors testifying against Belnick would be “covering their behinds,” Weingarten said, or acting on old grudges stemming from Belnick’s efforts to reform Tyco’s corporate culture. The Manhattan district attorney’s office has charged the 57-year-old Belnick with grand larceny, securities fraud and several counts of falsifying business records. Prosecutors claim Belnick received more than $30 million in unauthorized compensation and company loans. He failed to disclose these payments in several internal questionnaires used to prepare proxy statements, they claim. He faces up to 25 years in prison if convicted. Belnick’s trial, which is scheduled to last six weeks, follows the six-month trial of Kozlowski and former Tyco Chief Financial Officer Mark H. Swartz. That trial ended in a mistrial after one of the jurors was identified in the press during deliberations and subsequently received intimidating communications. Kozlowski and Swartz were accused of stealing $170 million from Tyco. Schwartz alluded to those charges in her opening statement. “There were people who walked away with a lot more money than Mr. Belnick,” she said, “but they are not on trial today.” In a methodical opening statement, Schwartz said Belnick’s misconduct began with his first loans from Tyco, used to buy and renovate an apartment on Central Park West shortly after he joined the company in 1998. The loans were inappropriate, she said, because Belnick did not qualify under the company’s loan plan for employees relocating to New York. Belnick, a former partner at New York’s Paul, Weiss, Rifkind, Wharton & Garrison, was moving only six blocks, from the law firm’s Midtown offices to Tyco’s, she noted, The prosecutor said Belnick later received a $17 million bonus and almost $10 million in loans to relocate to Utah because he had begun helping Kozlowski conceal activities from the board of directors. Among the activities Belnick allegedly concealed were Kozlowski’s use of company loan programs to buy presents for his wife and mistress and a criminal investigation of Kozlowski’s alleged avoidance of sales tax on art purchases. According to Schwartz, Belnick received his bonus in 2000 after he told the firm’s outside counsel at Wilmer, Cutler & Pickering, then handling an inquiry by the U.S. Securities and Exchange Commission, that Kozlowski’s use of company loan programs for personal items was well-known and fully authorized. He also got them to redact such information from documents to be turned over to the SEC. As a distinguished lawyer, Belnick might have been expected to “set a standard of honesty and integrity for all to follow,” said Schwartz. Instead, she said, “Tyco’s chief corporate counsel covered up for Dennis Kozlowski.” THE DEFENSE POSITION But according to Weingarten, the SEC investigation, the announcement of which had triggered a stock decline that reduced the company’s market capitalization by $13 billion, was the means by which Belnick proved his worth in a corporate culture that rewarded performance extravagantly. Belnick’s first years at Tyco had been difficult, with numerous clashes with entrenched interests who effectively shut him out of most major business decisions, Weingarten said. Belnick’s successful handling of the SEC inquiry was “a tour de force that saved Tyco not millions but billions,” he said. The subsequent bonus, he said, was “utterly consistent with Tyco’s philosophy.” Throughout his energetic opening statement, Weingarten leaned heavily on the reputation of Wilmer Cutler as one of the nation’s top firms in securities enforcement and litigation matters. He called Wilmer Cutler partner Williams McLucas, a former SEC enforcement chief, “the gold standard” in SEC investigations. Weingarten told the jury Wilmer Cutler lawyers would testify that Belnick led Tyco to a “spectacular result” in which the SEC declined to bring charges. “This is where Mark lives. This is what he does. And nobody does it better,” said Weingarten. Weingarten also spent considerable time addressing the hostility with which some at Tyco regarded Belnick. In particular, he said, Joshua Berman, a director and former partner at Kramer Levin Naftalis & Frankel, consistently opposed Belnick. Weingarten said the two clashed over several issues, including the amount of Tyco business sent to Kramer Levin for which Berman received referral fees. Weingarten characterized Belnick’s receipt of his relocation loans as the fruit of negotiations with Kozlowski. The New York loan, he said, was an inducement to get Belnick to leave his safe and prestigious position at Paul Weiss to join Tyco, a less well-known name at the time. Belnick had made enough money at Tyco to leave the company for his dream house in Park City, Utah, said Weingarten, and Kozlowski offered the Utah relocation loan as an inducement for him to stay. Schwartz had mocked Belnick’s company-backed relocation to Utah, arguing that the opportunity granted him to open a “one-man Tyco office out amid the ski slopes” was a reward for “staying out of Dennis Kozlowski’s way.” But Weingarten said Belnick wanted to move because his teenage son had been having difficulty in school in New York and his wife thought the child would do better in school in Utah. “First and foremost, Mark Belnick is a family man,” said Weingarten. Weingarten pointed to Belnick’s long and distinguished career before joining Tyco. His mentor at Paul Weiss was the noted litigator Arthur Liman, and he assisted the Senate committee investigating the Iran-Contra affair, Weingarten said. The prosecution, he said, had offered no credible time frame during which Belnick made the supposed leap from respected lawyer to criminal. “If the time frame doesn’t fit, you must acquit,” he said.

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