Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Former Tyco International Ltd. general counsel Mark A. Belnick “bought into the Kozlowski way of doing business” in accepting millions in unauthorized compensation, the prosecution said in closing arguments Wednesday. The defense has contended that former Tyco chairman and chief executive officer L. Dennis Kozlowski paid Belnick a $17 million bonus solely for successfully handling a 2000 investigation of Tyco by the Securities and Exchange Commission. “That’s ridiculous,” Manhattan Assistant District Attorney John W. Moscow told the jury. The bonus was paid to Belnick, Moscow argued, because the former general counsel agreed to help cover up a document showing that company money was being used to pay personal expenses for Kozlowski’s girlfriend. “He goes in with the memo and comes out with the money,” Moscow said of a March 28, 2000, meeting where prosecutors allege the two men made their bargain. The Manhattan District Attorney’s Office has charged Belnick with grand larceny, securities fraud and falsifying business records for accepting more than $30 million in loans and compensation unapproved by Tyco’s board. In the course of the two-month trial before Manhattan Supreme Court Justice Michael Obus, prosecutors have argued that Kozlowski paid Belnick such amounts because the lawyer helped conceal the CEO’s own, much larger thefts from Tyco. The defense has countered that Belnick, a former partner at New York’s Paul, Weiss, Rifkind, Wharton & Garrison, earned every penny of his compensation and reasonably relied on Kozlowski and former Tyco chief financial officer Mark Swartz for guidance on issues of board approval and disclosure of compensation. Kozlowski and Swartz were tried earlier this year on charges of stealing more than $170 million from Tyco. That trial ended in a mistrial in April and is scheduled to be reheard in January. DEFENSE CONCLUDES Wednesday morning, Belnick’s lawyer, Reid Weingarten of Washington, D.C.’s Steptoe & Johnson, concluded his closing argument begun on the previous day. He argued that the prosecution had failed to explain why a distinguished and successful lawyer like Belnick would suddenly turn to crime upon joining Tyco. “The prosecution’s case is not supported by logic, human experience and, most important, evidence,” said Weingarten. But Moscow said Wednesday that it was precisely Belnick’s past reputation that allowed the general counsel to effectively cover up Kozlowski’s misconduct. In his closing argument, Weingarten had cited William McLucas, the highly respected head of the securities enforcement practice at Wilmer, Cutler, Hale and Dorr and a former chief of enforcement at the SEC, as perhaps the most important witness at the trial. THE MCLUCAS INVESTIGATION McLucas, hired by Belnick to work on the SEC investigation, had raised an issue about the documents showing the use of company loan programs for personal expenses. But the securities lawyer testified that he had been satisfied with Belnick’s explanation that Kozlowski and other Tyco executives used the loan program as a revolving credit agreement. Moscow portrayed McLucas as a shrewd investigator who was about to uncover how Kozlowski was looting the company. The prosecutor said the March 2000 meeting between Belnick and Kozlowski was an emergency session focused on “McLucas, the memo and how to get McLucas off the memo.” According to Moscow, Belnick was willing to use his credibility with McLucas to persuade the latter that the executives’ use of the loan programs had been fully approved by the board of directors. Kozlowski paid $17 million for that, said Moscow, despite having previously planned to fire the general counsel. “The mere amount of money can create knowledge of what you’re being paid for,” the prosecutor said. Moscow mocked the idea that Belnick earned his massive bonus through his contribution to the SEC investigation. Wilmer Cutler did the actual work, he said, and Belnick was merely doing his job as general counsel. That job, noted Moscow, already paid a $1.7 million salary. The prosecutor also said the timing of the bonus was suspect. The SEC investigation began in December 1999 and ended in July 2000. Moscow said it seemed unlikely Kozlowski would promise such a lavish bonus only a few months into the matter. The bonus is “10 year’s salary for a few months work, someone else is doing it and it’s part of his job,” said Moscow. After a trial in which his courtroom tone and demeanor have often seemed flat, Moscow showed surprising spirit Wednesday in delivering his summation before the jury. The defense team, however, raised objections to Moscow’s reference to documents that Belnick and McLucas might have discovered if they had inquired further into how Tyco executives were using the company’s loan programs. Moscow had referred to documents showing loans had been repaid and reclassified. Out of the presence of the jury, defense lawyer Mark Hulkower, also of Steptoe, argued to Justice Obus that the reference had violated the judge’s earlier ruling that those documents, which show $25 million in loans by Kozlowski and others being forgiven, could not be offered in Belnick’s trial. Hulkower requested a mistrial or an instruction to the jury. Obus told the jury to disregard Moscow’s statement.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.