Ex-Tyco Executives Convicted

Despite the setbacks, Kozlowski and Swartz join a lengthening roster of corporate convicts. Former WorldCom Inc. chief executive Bernard J. Ebbers was convicted earlier this year and awaits sentencing. Martha Stewart has already served her prison term and is under house arrest.

Former Enron Corp. executives Kenneth L. Lay and Jeffrey K. Skilling await trial on criminal charges next year.

Former prosecutor David Gourevitch said the Tyco result indicates that juries are willing to convict in highly complex corporate cases and to hold executives accountable for behavior that may once have seemed acceptable.

"I think what you get out of this is the imposition of a very high standard of behavior on corporate executives," Gourevitch said. He said the case was not one in which most of the allegedly criminal behavior was deeply hidden from public view. Instead, he said, "it was a case in which everything was pretty much out in plain sight. . . . The message to executives from this ought to be that if it doesn't feel right, it isn't right." Gourevitch called the verdict "hair-raising" for defense lawyers.

It was the second criminal trial for Kozlowski and Swartz, who were accused of stealing $170 million from Tyco by abusing corporate loan programs and taking unauthorized bonuses and taking $430 million more by selling stock at prices artificially inflated by their misstatements about the company's finances.

The first case ended in a mistrial in April 2004 after several news organizations published a juror's name during deliberations and the juror told Obus that she had received a threatening letter and phone call.

After the first trial, jurors said in interviews that the juror, Ruth Jordan, was the lone holdout for acquitting both men on a number of charges. Jordan was in the courtroom through much of the second trial and was in attendance taking notes as the verdict was read on Friday.

In a telephone interview after the verdict, Jordan said she was surprised at the result and continues to believe Kozlowski and Swartz did not act with criminal intent. "My own opinion is that I still think they are not guilty," she said. "But I have to be sure to say that this is a new jury, and they are entitled to their own verdict. I still believe in the jury system."

The verdict marks the low point for Kozlowski, a once high-flying chief executive who built Tyco into one of the world's largest companies through an eclectic series of acquisitions across a variety of industries, including undersea telecommunications systems, financial services and electronic security.

In the same period, Kozlowski emerged as among the most imperial in an era of imperial chief executives, dominating his company, winning enormous pay and bonus packages, and freely spending company money on personal luxuries. Kozlowski also became known for a swashbuckling lifestyle that included driving a Harley-Davidson, flying helicopters and racing yachts.

Kozlowski's rapid fall began on June 3, 2002, when he abruptly resigned after telling members of Tyco's board that he was the subject of a tax evasion investigation by the New York City district attorney's office. He was indicted the next day on charges of dodging more than $1 million in sales taxes on valuable works of art, including paintings by Renoir and Monet. He faces a separate trial on the tax charges.

The tax evasion charges proved to just be a prelude to a much larger indictment of both Kozlowski and Swartz on Sept. 12, 2002, on fraud and larceny charges.

Tyco itself, meanwhile, has largely emerged from beneath Kozlowski's shadow, moving its domestic corporate headquarters from New Hampshire to West Windsor, N.J., and installing new directors and management. After dropping as low as $8.25 in July of 2002 in the height of the scandal, Tyco's stock has rebounded. Shares in the company closed at $31 on Friday, up 9 cents, or 0.3 percent, on the day.

In a prepared statement, Tyco spokesman David Polk said, "As the victim of the crimes that were prosecuted, Tyco looks forward to receiving back the money that was improperly taken from Tyco. We will continue to pursue our own civil actions against Mr. Kozlowski and other former company officials.

Staff writer Dean Starkman and staff researchers Richard Drezen, Meg Smith and Karl Evanzz contributed to this report.