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In closing arguments Wednesday, the prosecution said former top Tyco International Ltd. executives L. Dennis Kozlowski and Mark Swartz had told a “ludicrous” story in their defense, one which they “made up as they went along.” “If you heard a story like that outside the confines of this courtroom, you would have laughed,” Assistant Manhattan District Attorney Owen Heimer told the jury. The Manhattan District Attorney’s Office has charged both Kozlowski, Tyco’s former chief executive, and Swartz, the former chief financial officer, with grand larceny, securities fraud and falsifying business records over their alleged theft from the company of more than $150 million in unauthorized loans and bonuses. Defense lawyers for the pair have argued that both men, already lavishly compensated, had no motive to steal from Tyco and had demonstrated no criminal intent. They also have argued that the prosecution’s contention that the two schemed to steal money made no sense given the number of other people involved in the company’s compensation process. They claim all of the pair’s compensation, including loans and bonuses, was approved by Tyco’s board of directors. The prosecution’s case has depended heavily on former members of Tyco’s board of directors who have testified that they never approved several bonuses paid to Kozlowski and Swartz. Heimer told the jurors that those directors, who have been accused by the defense of trying to make Kozlowski a scapegoat for problems at Tyco, testified forthrightly and honestly. He noted that the defendants both admitted on the stand that they knew of no memoranda, meeting minutes or other documents that recorded those bonuses or loans. He attacked them for claiming they relied on the approval of Tyco director compensation committee head Philip Hampton, who died in 2001. “That story is not worthy of your belief,” said Heimer. The prosecutor told the jury that Kozlowski and Swartz had bought the cooperation of other important employees at the company with huge salaries and bonuses. He noted that Patricia Prue, the company’s director of human resources at the time, saw her salary approach $7 million in one year. She also received a Florida condo and a Manhattan apartment paid for by Tyco. Heimer also mocked the defense’s contention that the fact that the company’s auditors at PricewaterhouseCoopers were aware of some of the payments meant the executives were hiding nothing. He noted the accountants were tracking much larger cash flows within the corporation and were not focused on policing its leaders. In statements that drew repeated objections from the defense table, Heimer seemed to allude to the major accounting fraud scandals at Enron Corp. and the former WorldCom Inc. Manhattan Supreme Court Justice Michael Obus overruled the objections and Heimer went on to say that, if the mere presence of an auditor meant no criminal intent could be formed, no executive at a major corporation could ever be prosecuted. “Executives in public companies have been known to commit crimes,” he said. “They are not immunized. They are not exempt because they have auditors.” It is the two executives’ second trial on those charges. Last April, Justice Obus declared the first trial a mistrial after one juror, who had been identified by some newspapers as a holdout for acquittal, was contacted by an outside party. The retrial began in January. Kozlowski’s defense team is led by Stephen Kaufman and includes Austin V. Campriello of Bryan Cave. Swartz is represented by Charles Stillman of Stillman & Friedman. The jury is expected to get the case after Memorial Day.

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