Corporate Leadership on Trial
The Washington Post
Updated January 13, 2004 Executives from companies that were among the brightest stars in the 1990s will be fighting to defend their reputations and to stay out of prison in jury trials scheduled in the next few months. Tyco International Ltd. Jury selection began Sept. 29 and the trial is likely to continue through this month in State Supreme Court in Manhattan. Defendants: L. Dennis Kozlowski, 56, former chief executive; Mark H. Swartz, 43, former chief financial officer. Charges include grand larceny and enterprise corruption. Potential sentence: Each faces up to 30 years in jail. Judge: Michael J. Obus, a former public defender who has overseen a fraud case involving a Broadway producer. Lead prosecutors: Gerard Murphy, who prosecuted the head of a New York brokerage firm accused of a $175 million stock scam; Kenneth Chalifoux, who helped prosecute Canadian lawyer Harry Bloomfield for a stock scam that bilked investors out of millions of dollars. Lead defense attorneys: For Kozlowski, Stephen E. Kaufman, who represented financier Michael Milken and former Sotheby's executive Diana Brooks. For Swartz, Charles A. Stillman, who defended former Defense secretary Clark Clifford and the Rev. Sun Myung Moon. Key issues/evidence: Kozlowski and Swartz argue the $600 million in cash and loan forgiveness from Tyco was approved by board members and blessed by independent auditors. Martha Stewart Jury selection begins Jan. 20 in U.S. District Court in Manhattan. Defendants: Martha Stewart, 62, founder and chief creative officer of Martha Stewart Living Omnimedia; Peter Bacanovic, 41, Stewart's former broker at Merrill Lynch & Co. Charges include making false statements, obstructing an SEC proceeding and conspiring to lie about the reasons for Stewart's personal sale of ImClone Systems Inc. stock in December 2001; Bacanovic is charged with perjury; Stewart faces securities fraud charges for allegedly lying to investors in her company about her stock sales. Potential sentence: Stewart faces up to 30 years in prison; Bacanovic faces up to 25 years. Judge: Miriam Goldman Cedarbaum, who recently oversaw a high-profile civil case over rights to the name and dances of the late Martha Graham. Lead prosecutors: Karen Patton Seymour, head of the criminal division of the U.S. Attorney's office; Michael Schacter prosecuted former ImClone chief executive Samuel D. Waksal for insider trading. Lead defense attorneys: For Stewart, Robert G. Morvillo, whose past clients include Saudi-born business executive Adnan Khashoggi, "Sopranos" star Robert Iler and Merrill Lynch. For Bacanovic, Richard Strassberg, a former federal prosecutor. Key issues/evidence: Stewart and Bacanovic are charged with a coverup, but neither has been charged criminally for the underlying alleged insider trading. Stewart's lawyers plan to argue that her stock sales were legal and that she is being prosecuted for asserting her innocence. WorldCom Inc. Jury selection begins Feb. 4 in U.S. District Court in Manhattan. Defendant: Scott D. Sullivan, 42, former chief financial officer of WorldCom. Charges include conspiracy, securities fraud, bank fraud and false filings with the SEC. Prosecutors allege Sullivan and others at WorldCom improperly reported operating expenses as capital expenditures to pump up the company's bottom line. Potential sentence: More than 100 years in prison. Judge: Barbara S. Jones, who presided over an federal antitrust lawsuit against credit card issuers Visa and MasterCard. Lead prosecutors: David Anders, who is also prosecuting investment banker Frank P. Quattrone; Bonnie Jonas, who prosecuted the executives of Aurora Foods. Lead defense attorneys: Irvin B. Nathan, a former Justice Department official; Roy Black, who represented sportscaster Marv Albert and William Kennedy Smith. Key issues/evidence: Sullivan's lawyers have said they intend to argue that other telecommunications firms also treated so-called "line costs" as capital expenses. Adelphia Communications Corp. Jury selection begins Feb. 23 in U.S. District Court in Manhattan. Defendants: John J. Rigas, 78, founder and former chief executive of Adelphia; Timothy J. Rigas, 46, John's son and former chief financial officer; Michael J. Rigas, 48, John's son and former vice president of operations; and Michael C. Mulcahey, 45, a former director of internal financial reporting. Charges include misappropriating hundreds of millions of dollars of corporate funds. Potential sentence: Each faces up to 100 years in prison. Judge: Leonard B. Sand, who presided over the case of four men convicted of the 1998 bombings of U.S. embassies in Africa. Lead prosecutors: Christopher J. Clark, who prosecuted several securities fraud cases; Richard D. Owens, chief of the fraud section in the U.S. attorney's office in Manhattan; Judd C. Lawler, who has worked on the Adelphia bankruptcy and terrorism law cases. Lead defense attorneys: For John Rigas, Peter Fleming Jr., whose clients have included boxing promoter Don King. For Timothy Rigas, Paul R. Grand, who has also defended executives at Qwest Communications and Bankers Trust. For Michael Rigas, Andrew J. Levander, who served as an associate independent counsel in the Michael Deaver investigation. For Mulcahey, Steven M. Cohen, a former prosecutor and SEC lawyer who now represents Napster. Key issues/evidence: Lawyers for several of the defendants have said they will argue that loan programs and other steps were done with the blessing of accountants and lawyers. Enron Corp. -- Lea W. Fastow Jury selection begins Feb. 10 in U.S. District Court in Houston. Defendant: Lea W. Fastow, 41, former assistant treasurer at Enron Corp. and wife of one-time Enron chief financial officer Andrew S. Fastow. Charges include conspiracy to commit wire fraud and filing false tax returns. Potential sentence: Up to 37 years in prison. Judge: David Hittner, who threw out the conviction of a former death row inmate because his attorney slept through the trial. Lead prosecutors: Linda Lacewell and David Hennessy, assistant U.S. attorneys who have handled an array of drug conspiracy and organized crime cases. Lead defense attorney: Mike DeGeurin, who has defended imprisoned author Vanessa Leggett and exonerated death row inmate Clarence Brandley. Key issues/evidence: Lea Fastow's attorneys unsuccessfully tried to postpone her trial so her husband could testify in her defense about business partnerships he created and that they allegedly used to funnel money to themselves and their two young sons. Enron Corp. -- Andrew S. Fastow Jury selection begins April 20 in U.S. District Court in Houston. A motion by Fastow's lawyers to move the case out of Houston because of potential bias among jurors there is pending. Defendant: Andrew S. Fastow, 42, former chief financial officer at Enron. Charges include money laundering, mail and wire fraud, and false statements. Fastow allegedly served as the mastermind of a scheme to hide Enron's debt and enrich himself and others through secretive off-books partnership deals. Potential sentence: More than 100 years in prison. Judge: Kenneth Hoyt, a Reagan appointee who has drawn criticism for his statements from the bench about ethnic characteristics in a major environmental case. Lead prosecutors: Linda Lacewell, a former federal prosecutor in Brooklyn, who has handled complex business and organized crime cases, including prosecution of Salvatore "Sammy the Bull" Gravano; John Hemann, who has tried several securities fraud cases and assisted on prosecutions involving McKesson Corp. Lead defense attorney: John W. Keker, a former special prosecutor in the Iran-contra case against Oliver North. He also defends investment banker Quattrone. Key issues/evidence: Fastow will argue that he set up secretive off-books partnerships with the blessing of higher-ups at Enron, auditors, lawyers and other outside advisers. Frank P. Quattrone Jury selection for retrial begins March 22 in U.S. District Court in Manhattan. Defendant: Frank P. Quattrone, 48, was a top investment banker at Credit Suisse First Boston. Charges include obstructing justice and attempting to tamper with evidence. Prosecutors allege Quattrone was trying to hamper a grand jury investigation into how CSFB handed out shares in hot initial public offerings when he sent his subordinates an e-mail urging them to clean up their files. The first trial ended in a hung jury. Potential sentence: Up to 25 years in prison. Judge: Richard Owen, who presided over the first trial. A 29-year-veteran of the bench, Owen writes operas on the side and once found former Beatle George Harrison guilty of plagiarism. Lead prosecutors: Steven R. Peikin, co-head of the securities fraud unit of the U.S. attorney's office in Manhattan; David Anders, who is also prosecuting Sullivan. Lead defense attorney: John W. Keker, who also represents Andrew Fastow. Key issues/evidence: The central issue in the first trial was whether Quattrone understood the grand jury was looking at his division. Quattrone's performance on cross-examination hurt him badly with some jurors in the first trial. It is unclear if he will testify again and whether he will be better able to explain his role in the IPO process if he does.
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