Tyco Fraud Essay

1050 Words5 Pages
The Discovery
The embezzlement of funds took place as a carefully guarded secret. Neither the Board of Directors nor the outside auditor, Price water-house Coopers detected the fraud. Even the Securities and Exchange Commission did not probe into the company till June 2002.
An interesting question is how did the CEO and CFO keep it under wraps for a period of around 4 years? Firstly, Kozlowski only allowed a handful of fellow employees and confidants to work with him at the Tyco headquarters in New Hampshire. He carefully hand-picked his department heads and refused to hire a president and assumed control over internal audits. The SEC probed Tyco industries on many occasions between 1999 and 2002. In 1999, an analyst at the company reported questionable accounting practices with the SEC. This caused the stock
…show more content…
12, 2002: A criminal indictment accusing Kozlowski and Swartz of “enterprise corruption for allegedly stealing more than $170 million from Tyco and obtaining $430 million by fraud in the sale of company shares.” Mark Belnick is charged separately with falsifying records to conceal more than $14 million in company loans.
Dec. 17, 2002: Board member Frank Walsh pleads guilty in an alleged scheme to hide the $20 million in fees for the CIT Group deal.
Oct. 7, 2003: The first trial of Kozlowski and Swartz begins with opening statements in which prosecutors characterize them as “crime bosses who looted Tyco.” Defense lawyers call them “honest executives who deserved and disclosed all corporate payments and perks.”
Oct. 28, 2003: The jury is shown a video of a birthday party Kozlowski threw for his wife in Italy. Tyco paid almost half the $2 million cost of the event.
Nov. 25, 2003: Prosecutors show the jury a video of the $6,000 shower curtain and other expensive interiors at Kozlowski's Tyco-owned apartment in New York.
April 2, 2004: A mistrial is declared after a juror says that she received a letter pressuring her to convict Kozlowski and
Open Document