A New York state judge has tossed out one of the most serious criminal charges against former Tyco International Ltd. chief executive L. Dennis Kozlowski.
State Supreme Court Justice Michael J. Obus dismissed the enterprise corruption count against Kozlowski in an opinion issued late Monday. The judge also declined prosecutors' request to consolidate separate sales tax evasion charges against Kozlowski with a broader fraud case against him.
"This decision is a very positive development for the defense," said James R. DeVita, a defense lawyer for Kozlowski. "I think it will narrow and focus the issues for the trial."
Lawyers for Kozlowski had asked the judge to throw out the enterprise corruption charge, arguing that was overreaching. Prosecutors had signaled weeks ago that they would not pursue the enterprise corruption charge, citing a recent appeals court decision that might give defense lawyers a strong issue in the event of an appeal. Barbara Thompson, a spokeswoman for Manhattan District Attorney Robert M. Morgenthau, declined to comment on the judge's ruling yesterday.
Kozlowski and former Tyco finance chief Mark H. Swartz are scheduled to be retried on conspiracy, grand larceny and securities fraud charges Jan. 18. They are accused of looting the Bermuda conglomerate of more than $600 million by manipulating corporate loan programs and making improper stock sales.
A six-month criminal case against the men ended in a mistrial in April after a holdout juror was publicly identified in some news reports and received what she viewed as coercive mail.
DeVita and Charles A. Stillman, the lead lawyer for Swartz, have maintained that their clients' actions were approved by outside auditors and Tyco's board of directors.
Kozlowski also faces a separate trial on charges that he bilked New York out of sales taxes on $13 million worth of artwork he bought in the state but claimed was sent to Tyco's New Hampshire headquarters.
Obus said that he would not join the two criminal cases against Kozlowski partly because Tyco itself was an alleged victim in the broader fraud case. But in the sales tax evasion case, he said, Tyco arguably benefited from Kozlowski's alleged misconduct because the company was not forced to shell out some $1 million in taxes on the artwork.
"This prospect not only raises some question as to the theft itself -- why would the defendant avoid the payment of any sales tax if another was paying the tab? -- but also undercuts the claimed commonality of purpose between the grand larceny and sales tax conspiracies as well," Obus wrote.