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In closing arguments Tuesday, the lawyer for former Tyco International general counsel Mark A. Belnick said the prosecution had based its case on “wildly unrealistic” ideas of how a general counsel or any other employee would interact with his superiors in a corporate setting. To the Manhattan district attorney’s office, Belnick “wasn’t the general counsel, he was the inspector general,” said Reid Weingarten of Washington, D.C.’s Steptoe & Johnson. Arguing that there was nothing untoward about Belnick relying on the assurances of former Tyco chairman and chief executive officer L. Dennis Kozlowski, Weingarten said of the prosecution: “They haven’t made a mountain out of a molehill, they’ve made a mountain out of an anthill.” Belnick, a former partner at Paul, Weiss, Rifkind, Wharton & Garrison, is facing charges of grand larceny, securities fraud and falsifying business records. Prosecutors contend that the former general counsel received over $30 million in unauthorized loans and compensation because he helped Kozlowski cover up his own thefts from Tyco. The defense has in turn argued that Belnick earned his compensation through stellar performance, particularly his successful handling of a 2000 investigation of Tyco by the Securities and Exchange Commission. They have also argued that Belnick reasonably relied on Kozlowski and Mark H. Swartz, Tyco’s former chief financial officer, on dealing with the board of directors and disclosure issues. In summing up the defense case after almost two months of trial before New York Supreme Court Justice Michael Obus, Weingarten methodically addressed the jury about each witness they had heard. The defense lawyer touted the credentials and integrity of witnesses he regarded as sympathetic, while questioning the truthfulness and motives of more adverse witnesses. Weingarten directed the jury to pay close attention to the testimony of Brian Moroze, the mild-mannered Tyco in-house lawyer who prepared many of the documents relating to the more than $14 million in relocation loans Belnick used to buy luxury homes in Manhattan and Park City, Utah. Noting that Moroze had not thought the loans improper at the time, Weingarten said, “For you to believe Mark Belnick did wrong with these relocation loans, you have to believe Brian Moroze did too.” Weingarten singled out the testimony of two other lawyers as perhaps the most significant. Lewis Liman, now a partner at Cleary, Gottlieb, Steen & Hamilton but formerly a partner at Wilmer, Cutler & Pickering, was a “huge witness” who “blew away so much of their case,” said Weingarten. William McLucas, the head of Wilmer Cutler’s securities enforcement practice was “even bigger than Liman,” he said. Both Liman and McLucas worked closely with Belnick on the SEC matter and had raised an issue during the investigation about documents showing that $100,000 from a Tyco loan was being used to pay vacation expenses for Kozlowski’s then-girlfriend and present wife, Karen Mayo. U.S. CLAIM OF COVERUP Prosecutors claim Belnick helped Kozlowski cover up this fact by having the document redacted. Kozlowski allegedly rewarded Belnick with a $17 million bonus. The defense claims the bonus was strictly for Belnick’s work on the SEC investigation. Weingarten said Tuesday that the testimony of the Wilmer Cutler lawyers showed that neither thought the Karen Mayo document was relevant to the SEC investigation and regarded its redaction as chiefly related to Kozlowski’s privacy concerns. “The Karen Mayo document is a big deal only at this table,” he said, indicating the prosecution table where Assistant District Attorneys John Moscow and Amy Schwartz sat. Weingarten reminded the jury Tuesday of his reference to McLucas in opening statements as the “gold standard” among securities lawyers. He noted that McLucas, the former head of enforcement at the SEC, had been satisfied with explanations that Tyco executives used a company loan program as a “revolving credit arrangement” which they repaid regularly. “Fine, next issue,” McLucas testified he had responded. “If it’s the next issue for Bill McLucas, why can’t it be the next issue for Mark Belnick,” Weingarten said. The defense lawyer had less reverence for other prosecution witnesses, chiefly former members of Tyco’s board of directors. John Fort, Joshua Berman and other former directors have testified they were never informed about and never approved Belnick’s loans or compensation. Noting the board’s deference to Kozlowski as he led the company’s stock higher and higher in the past decade, Weingarten said Tyco board members had been “very happy to ride up the Kozlowski elevator in the early ’90s.” “They made a lot of money and they essentially served as his rubber stamp,” he said. Board members were concerned about their own liability for poor governance at Tyco, he said. Noting that members of the compensation committee never asked Belnick about his pay, Weingarten said Belnick should not be held responsible for the board’s failings. “He never saw his role as watchdog of the board,” said Weingarten.

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