Dennis Kozlowski Essay Example

the United States in 1999, earning a staggering amount exceeding $170 million. It is important to note that a majority of his earnings were directly linked to Tyco's stock performance (1). As a result of his remarkable journey from poverty to wealth, Dennis developed a strong fondness for luxurious and extravagant possessions, sparing no expense when acquiring them.

He made substantial donations to schools and charities in various locations, including New York, Maine, and Nantucket, Massachusetts (1). He dedicated approximately $30 million towards constructing a mansion in Boca Raton, Florida. He also allocated an additional $30 million for the acquisition, renovation, and furnishing of a Fifth Avenue apartment in Manhattan (3). Notably, his Manhattan residence was adorned with extravagant items like a shower curtain worth $6,000 and a dog-shaped umbrella stand valued at $15,000. Furthermore, he showcased his collection of airplanes and speedboats which included the purchase of the Endeavor racing yacht from the 1930s for $15 million. In 2001 alone, he invested over $13 million in fine art to solidify his standing among New York's social elite (1). Ultimately though we all retain our youthful spirit deep down.

Finally, he organized a lavish 40th birthday celebration for his wife on the Mediterranean island of Sardinia, costing $2 million. The event featured a performance by Jimmy Buffett, young women in togas throwing rose petals into a pool, oiled and muscular young men striking gladiatorial poses, and even an ice sculpture depicting Michelangelo's David urinating Stolichnaya vodka. Despite the extravagant display of wealth, something went wrong. Kozlowski, who headed a company with annual revenue growth of 47% from 1997 to 2001, seemed untouchable (1, 3).

In the eyes of

investors (and Wall Street), he could do no wrong. Unfortunately, they were mistaken, and Tyco was being robbed blind. Kozlowski’s first misjudgment was on the purchase of a piece of art in New York City worth several million dollars. To avoid paying sales tax in New York, he had the artwork shipped out of state to Tyco’s headquarters in New Hampshire. A Tyco employee signed for the package and immediately sent the artwork back to Kozlowski’s Manhattan apartment. (New York’s law allowed sales made from the State of New York to other states to be exempt from sales tax in New York (7).)

By evading about $1 million in sales tax, Dennis was taking advantage of the rules in a questionable manner. Robert Morgenthau, the District Attorney of New York County (borough of Manhattan), initiated an investigation into Kozlowski due to the unpaid tax. Following the investigation, Kozlowski was officially charged with the felony of conspiring to evade sales tax.

, sales tax evasion (7). Two days later, after being informed of the indictment, Kozlowski was asked to resign by the board due to "too much mud on the windshield"(1). Despite his previous denial to BusinessWeek about resigning as CEO, Kozlowski ultimately did so and became jobless several weeks later (3). In order to prevent paying Kozlowski his "golden parachute", Tyco recruited a group of lawyers and accountants to examine the company's financial statements, hoping to discover evidence to use against him.

What they discovered went beyond tax evasion. The financials revealed that millions of dollars were funneled through the company’s Key Employee Loan Program, which was intended to help executives with stock issuance taxes, but ended

up being used by Kozlowski for other purposes (1, 8). The house in Boca Raton? It was partly financed by a $19 million payment from Tyco. And the Manhattan apartment? Tyco fully paid for it. As for the extravagant birthday party in Sardinia? Tyco covered half of the $2.

After issuing each of these "loans" amounting to $1 million, the accounts were promptly cleared and the amounts were forgiven. Tyco stumbled upon substantial evidence of fraud and informed Morgenthau, resulting in additional charges of "enterprise corruption," which encompassed grand larceny and unauthorized compensation through bonuses and loans totaling $170 million. If convicted, Kozlowski may be sentenced to a maximum of thirty years imprisonment.

In the autumn of 2003, the trial began as the defendant proclaimed his innocence regarding the alleged white collar theft. The prosecution provided evidence, highlighting Kozlowski's use of the employee loan program to finance extravagant purchases like art, jewelry, and mansions (1). They also emphasized his excessive spending, which juror Ruth Jordan considered inflammatory and unproductive in addressing Tyco's embezzlement accusation. After lengthy deliberations, the jury remained deadlocked with only one dissenting vote from Jordan.

She declined to convict due to her belief that the prosecution did not present any indisputable proof of Kozlowski's guilt. Following the receipt of an anonymous letter criticizing her for not voting for conviction, the judge promptly declared a mistrial (1). The prosecution attempted a second trial at Morgenthau's behest. By streamlining their case, reducing the number of witnesses and placing less emphasis on Kozlowski's extravagant spending, the second trial progressed more swiftly.

Kozlowski testified in court to explain that he never committed a crime while serving as the company's top

executive. However, he was found guilty on all counts except one and was sentenced to eight to twenty-five years in prison. In addition, he was ordered to pay $97 million in restitution (1). Despite the defense's promise to appeal, Kozlowski’s appeal was unanimously denied by the New York State Supreme Court in November 2007. As a result, Kozlowski currently resides at the MidState Correctional Facility in New York State, where he is held in a protective custody unit with medium security. Currently, his daily activities involve working in the prison's laundry, reading biographies during leisure time, and teaching GED classes to fellow inmates (1). His previous days of extravagant parties, private jets, privacy, and freedom are now a thing of the past.

Kozlowski asserts that he disagrees with the jury's verdict, as he maintains his innocence regarding the charged crimes. He acknowledges his potential for making errors but emphasizes that these mistakes were unintentional and not acts of criminality.

According to the prosecutor, all the evidence against the company was found in their books and records. There were no instructions to hide or shred anything in order to conceal any wrongdoing. Abraham Zeleznik, a psychoanalyst and Harvard professor, believes that Kozlowski's downfall was a result of his uncontrolled sense of entitlement. He suggests that Kozlowski had a narcissistic personality and believed he was entitled to take whatever he wanted from the company. Whether Kozlowski is considered good or bad is a matter of individual morality. The appellate courts have already determined that the judicial system did not fail him, despite his claim otherwise.

Despite Dennis' tarnished reputation, repairing it will be nearly impossible. Corporate excess in America is

often characterized by extreme examples of compensation and amplified negative consequences. In his perspective, Kozlowski believes he was used as a scapegoat for the stock market's retraction in 2001 and 2002. Due to his $100-million-a-year CEO position, he became the obvious choice for blame. (6) This information is sourced from CNBC's American Greed documentary Party's Over: Tyco's Kozlowski and is cited as number one.

Party’s Over: Tyco’s Kozlowski
http://www.cnbc.com/id/23240635
http://www.hulu.com/watch/46535/american-greed-partys-over-tycos-kozlowski
(1) I am Innocent
http://www.hossli.

The text contains hyperlinks to three articles: "I am Innocent" at com/articles/2009/05/22/i-am-innocent/, "The Rise and Fall of Dennis Kozlowski" at www.businessweek.com/magazine/content/02_51/b3813001.htm, and "Top 10 Crooked CEOs" at www.ime.

Time Article

Google Finance Link for NYSE:TYC

The Smoking Gun's Mug Shot of Dennis Kozlowski

L. Dennis Kozlowski; (sales tax evasion) (8) The People of the State of New York vs. L.

Dennis Kozlowski faced charges of enterprise corruption. For more information about the case, please visit http://news.findlaw.com/hdocs/docs/tyco/nykozlowski91202ind.pdf.