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The two former top executives of Tyco International Ltd. were each sentenced Monday to prison terms of 8 1/3 to 25 years on charges they stole more than $150 million in unauthorized loans and bonuses from the company. L. Dennis Kozlowski, 58, Tyco’s former chief executive officer, and Mark H. Swartz, 44, the former chief financial officer, were led away in handcuffs after Manhattan Supreme Court Justice Michael Obus handed down the sentence. The judge denied their request to delay incarceration while they applied to be released on bail pending appeal of their convictions. In the course of their three-year-long prosecution, the two men, particularly Kozlowski, have become symbols of corporate greed and excess. But the judge put the case in straightforward terms in imposing sentence. Despite many unusual characteristics and complications, he said, “the heart of the case is basic larceny.” First indicted in September 2002, the two executives were convicted in June on several counts of grand larceny, securities fraud, conspiracy and falsifying business records. The judge issued separate sentences on the other counts but said those would be served concurrently with the grand larceny sentence. Justice Obus also ordered Kozlowski to pay $97 million in restitution to Tyco and $70 million in fines. Swartz was ordered to pay $37 million in restitution and $35 million in fines. The restitution amounts were tied to the amounts of bonuses the two men were found to have stolen. The defense had maintained throughout the trial that the bonuses were legitimate and fully approved by Tyco’s board of directors. Though tough, Obus’ sentence was less than that requested by the prosecution. Assistant District Attorney Owen Heimer had asked the court to impose the maximum sentence of 15 to 30 years “to send the signal that, here in the financial capital of the world, we will not tolerate theft … no matter who you are.” Heimer said Kozlowski had been found guilty of the largest larceny ever prosecuted in New York state and, as such, a 15-year term would not be “unduly harsh.” In urging a tough sentence, prosecutors said Kozlowski and Swartz should not be treated more leniently than other criminal defendants because of their backgrounds. Rather, they argued, the executives should be treated more harshly because they turned to crime despite already possessing every advantage and opportunity. The defense lawyers argued for leniency on the grounds that both defendants were fundamentally good people with close ties to family and community and histories of charitable contributions. Both men submitted to the court scores of letters by family, friends and colleagues attesting to their good character. Stephen Kaufman, Kozlowski’s chief lawyer said only “vitriolic vengeance” would be served by the sentence requested by the prosecution. In attacking the prosecution’s attempts to have the maximum sentence imposed, Swartz’s lawyer, Charles Stillman, invoked Army lawyer Joseph Welch’s 1954 denunciation of Senator Joseph McCarthy. “Have you no sense of decency?” Stillman asked rhetorically. “Have you no sense of decency at long last?” Each of the defendants spoke briefly on his own behalf. Kozlowski said he was a different man than had been depicted by the prosecution and in the media. He said he understood he would be incarcerated but asked the judge to be as lenient as possible. In asking for leniency, Swartz said he had always tried to live an honest life and to benefit his family and community. “I never thought I would be in the position I’m in today nor did I ever fear it,” he said. In handing down sentence, Obus said his view of the defendants was not as “stark” as that of the prosecutors, who had mocked the defendants’ claims of charity and questioned the motives of some who testified about their character. LETTERS CONSIDERED The judge said he had carefully considered all the letters he had received from people regarding the defendants’ character. The judge said he, unlike the prosecution, believed most of the letters were genuine. He said they depicted men whose behavior towards friends and family was sharply at odds with the conduct of which they were convicted. The long sentences recently given to white-collar criminals has spurred debate on whether such criminals, treated lightly in the past, are now being treated too harshly. Former assistant Manhattan district attorney Ronald Blum, now a partner at Manatt, Phelps & Phillips who also teaches white-collar criminal law at Fordham School of Law, said such sentiments had some merit but he said the sentence given to Kozlowski and Swartz sounded “pretty sensible” to him. Given the scale of the thefts, he said, “I don’t think the judge could have gotten away with less than that with a straight face.” State judges have more flexibility in sentencing than federal judges, who are subject to strict sentencing guidelines. The Tyco executives’ sentences are considerably lower than that recently meted out in federal court to former WorldCom CEO Bernard Ebbers, who was sentenced to 25 years in prison in July. Kozlowski and Swartz will be eligible for parole after serving 8 1/2 years of their sentence. With good behavior, they will be able to shave one-sixth off that time as well. On the other hand, the state prison system lacks the relatively comfortable minimum security facilities in which federal white-collar inmates are typically incarcerated. Blum said the realities of state prisons were a likely though unacknowledged influence on state judges’ sentencing decisions. Kaufman warned the judge Monday that any sentence over 72 months would likely mean his client would be placed in a maximum security lockup. The prison at which the two men serve their sentences will be determined by the Department of Corrections. Justice Obus said he would tell the department that neither of the men should be regarded as a security risk.

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