Former Tyco International Ltd. general counsel Mark A. Belnick, accused of taking a $17 million bonus as a reward for helping conceal corporate wrongdoing, was acquitted of all charges Thursday by a Manhattan jury.
Belnick is the highest-ranking corporate official to be acquitted in a jury trial since the December 2001 collapse of Enron Corp. sparked a round of corporate prosecutions. His case demonstrated the challenge prosecutors face when trying to prove that white-collar defendants knew their activities were against the law, legal analysts said.
The jury deliberated for five days over two weeks before finding Belnick not guilty of grand larceny, securities fraud and falsifying business records. Prosecutors alleged during the 11-week trial that Belnick accepted cash and stock from Tyco chief executive L. Dennis Kozlowski as hush money and that he knew the bonus had not been approved by Tyco's board of directors.
Belnick sobbed after the verdict was read. Outside the courthouse, he said, "I feel terrific. Right now I just want to take a deep breath and go home," according to Bloomberg News.
"We are happy, relieved, but not surprised," his lawyers Reid H. Weingarten and Mark J. Hulkower said in a written statement. "We always believed we represented an innocent man."
The acquittal is a major defeat for the Manhattan district attorney's office, especially because it came soon after a mistrial in their case against Kozlowski and former Tyco chief financial officer Mark H. Swartz.
Sherry Hunter, a spokeswoman for the district attorney's office, said, "The jury has made its decision and of course we accept that."
The two Tyco results and another New York jury's decision last week to acquit two of four Adelphia Communications Corp. executives suggest that not all corporate fraud cases are slam dunks. Jurors have been particularly skeptical of claims that executives acted with criminal intent.
The Belnick jury "put themselves in his moccasins," said Samuel H. Solomon, a New York jury consultant who specializes in white-collar cases. "Everybody is getting big bonuses. . . . Your boss comes to you and says, 'Congratulations, you got the bonus.' Are you going to say, 'No thank you?' "
Stanford University law professor Robert Weisberg said the case showed that "if the government is going to exploit broad fraud statutes, the government is going to have to accept [that they must prove] a pretty high level of criminal intent."
The Belnick acquittal also demonstrates the difficulty that prosecutors face in trying to hold lawyers responsible for fraud allegedly committed by company executives, analysts said.
"After the Enron explosion of cases in 2002, there was a lot of legislation and lot of talk from prosecutors about holding not only executives responsible for what was said and done, but also attorneys," said Terry W. Bird, a former prosecutor who is now a defense lawyer in Los Angeles. But the Belnick verdict shows that jurors "are going to apply the same standard to attorneys as they would anyone else -- which is refreshing and encouraging."
Kozlowski and Swartz are scheduled to be retried in January on 32 larceny, fraud and document falsification charges, including allegedly paying illegal bonuses to themselves and Belnick.
Their jury was split 11 to 1 in favor of conviction on a number of counts, according to jurors' accounts, when Judge Michael J. Obus, who is handling all of the Tyco cases, declared a mistrial because the holdout juror had been publicly identified and had received a letter that she found upsetting.
Thursday's verdict encouraged their defense teams because it could help undermine the prosecution's contention that misconduct occurred at Tyco.
"The verdict demonstrates that a jury can overcome the hysteria that exists when a high-ranking member of corporate America is charged with a crime," said Austin V. Campriello, a lawyer for Kozlowski. "The prosecution theory was that Dennis Kozlowski stole money to give to Mark Belnick. The jury rejected that theory."
And Swartz's lawyer Charles A. Stillman said he and his client "are extremely happy for Mark Belnick and his family . . . and look forward to Mark Swartz's vindication. Merely because somebody is charged in a high-profile case doesn't mean they're guilty."
Outside analysts cautioned that Kozlowski and Swartz may have a harder time than Belnick. "It's a very different set of facts. Belnick . . . was not really accused of looting the company in the same way Kozlowski and Swartz were," said Washington defense lawyer Michael N. Levy. "What the Belnick verdict and the jury's refusal to convict [Adelphia operations chief] Michael Rigas shows is the government just can't lump a lot of people together and say all these people must have known this was wrong and expect juries to convict."
Johnson reported from Washington.