Former Tyco CEO Dennis Kozlowski was sentenced to up to 25 years in prison for looting the company of hundreds of millions of dollars, the climax of a case of executive greed replete with tales of a US$6,000 gold-threaded shower curtain and a US$2 million Mediterranean birthday party.
Kozlowski, 58, was led out of the courtroom in handcuffs on Monday as his wife quietly sobbed from a bench three rows back. He will be eligible for parole after eight years and four months behind bars in a state prison in New York.
Tyco's former finance chief Mark Swartz, 44, received the same sentence, and state Supreme Court Justice Michael Obus ordered the defendants to pay a total of US$134 million in restitution to Tyco International Ltd. In addition, the judge fined Kozlowski US$70 million, and Swartz US$35 million.
Assistant District Attorney Owen Heimer asked the judge for the maximum sentence of 30 years, saying Kozlowski had "committed theft and fraud on an unprecedented, staggering scale." He said Kozlowski and Swartz stole so much from the company that "Tyco became a worldwide symbol of kleptocratic management."
Kozlowski pleaded with the judge to be as "lenient as possible" and to consider "all the positive things I have done in my life."
His lawyer, Stephen Kaufman, read from letters written on his client's behalf and said, "He's a good man. He's a decent person. His reputation has been tarnished, but his life should not be destroyed."
But the prosecutor said the defendants should be properly punished for stealing US$180 million outright, and improperly made hundreds of millions more through manipulations of Tyco's stock.
"This exceeds anything ever prosecuted in this state," Heimer said.
They join a line of other executives sentenced to prison for lengthy stints after white-collar scandals that outraged the public.
Former WorldCom Chairman Bernard Ebbers was sentenced to 25 years in prison for the US$11 billion accounting fraud that toppled the telecommunications company that emerged from bankruptcy as MCI Inc. Adelphia Communications Corp founder John Rigas was sentenced to 15 years in prison for his role in the looting and fraud at the cable TV company. His son and former finance chief, Timothy Rigas, got 20 years.
Enron Corp founder Kenneth Lay, former CEO Jeffrey Skilling and former top accountant Richard Causey are to go to trial next year.
Unlike WorldCom and Enron, Tyco survived the scandal. Tyco, which has about 250,000 employees and US$40 billion in annual revenue, makes electronics and medical supplies and owns the ADT home security business.
Kozlowski and Swartz will be sent to one of New York's prisons because they were convicted in state court, meaning they will do considerably harder time than they would have at a federal facility.