Friday, a judge declared a mistrial
in the headline-grabbing case of Kozlowski, the ex-CEO, and Swartz,
the ex-CFO. Prosecutors could retry the two, who face up to 30 years
in prison if convicted on the charges they looted Tyco of $600 million.
Belnick also faces the possibility
of heavy prison time, though the amount of money involved in his
alleged crimes is far less.
The Manhattan district attorney
has charged Belnick with eight felony counts relating to a $12 million
bonus and $14 million in loans he received from Tyco. The most serious
charge is first-degree grand larceny, which alone could land Belnick
in state prison for 25 years. He also is charged with one count
of violating state securities fraud laws and six counts of falsifying
business documents — counts that each carry maximum four-year
Experts say that if convicted, Belnick
would likely serve far less than 25 years. He could avoid prison
altogether if he is cleared of grand larceny. That is exactly what
Belnick's attorney, Reid Weingarten, says will happen. "No
fair-minded jury will ever convict him," he says.
As a well-respected Iran-Contra
prosecutor and partner in the law firm Paul Weiss before joining
Tyco, Belnick is cut from different corporate cloth than his former
bosses. Both Kozlowski and Swartz are former auditors, Kozlowski
having worked at a New Hampshire photocopier firm and Swartz coming
from Deloitte & Touche when he joined Tyco in 1991.
What Belnick's case lacks in color
— there will be no videos of company-paid toga parties or
talk of a $6,000 shower curtain — it might make up for with
colorful legal sparring and revelations about a religious conversion.
Prosecutors have charged that Belnick
benefited from an allegedly improper relocation loan from Tyco to
build a second home in Park City, Utah.
It turns out that Belnick, once
a conservative Jew, donated some of that money to a conservative
branch of the Catholic Church known as Opus Dei. This was after
Belnick quietly converted to Catholicism without telling his wife,
parents or other family members.
Adding to the potential drama in
the trial is that veteran New York state prosecutor John Moscow,
a figure both revered and reviled in Manhattan legal circles, will
try the case himself. Moscow has not tried a case since the early
1990s, when he led the prosecution of Washington lawyer Robert Altman,
who was charged in the BCCI bank scandal. Altman was acquitted and
the indictment of his mentor, attorney Clark Clifford, was dropped.
Lawyers knock heads
In a preliminary hearing before
Judge Michael Obus two weeks ago, Weingarten and Moscow gave a preview
of what to expect in coming weeks. They quickly went at it, with
Weingarten complaining that Moscow has been "terrorizing"
witnesses that he wants to call in defense of Belnick. Moscow argued
that he's simply doing his job, trying to determine what potential
witnesses might say if called into court during the trial. He also
questioned Weingarten's professionalism.
Weingarten, a scrappy former federal
prosecutor known for his wit and coarse language, also represents
ex-WorldCom CEO Bernie Ebbers and Enron's former chief accounting
officer Rick Causey. He said it was the first time an adversary
had criticized his professionalism. "I feel like I'm in the
company of a grade school bully who hasn't gotten his way,"
he told Obus.
Moscow backed off, saying he "did
not intend to impugn Mr. Weingarten's professionalism."
The colorful and sometimes contrasting
personalities and antics of the players can obscure the fact that
Tyco is a fairly simple story. The misdeeds are often lumped in
with the corporate scandals of Enron and WorldCom, but with Tyco,
there are no special-purpose entities or complicated accounting
rules for jurors to wade through. White-collar defense experts say
it's either stealing or it's not.
Belnick, for his part, either was
authorized to accept a relocation loan that didn't involve a work-related
move — or at least wasn't prohibited from doing so. He had
the legal justification for accepting a $20 million bonus from Kozlowski
— who might or might not have had the justification to give
it to him — or he did not.
Former federal prosecutor Kirby
Behre, now a white-collar defense attorney, says Belnick could benefit
from the mistrial ruling for Kozlowski and Swartz.
"It's created a situation that
instead of the prosecution going in thumping their chests saying,
'We got a scalp,' potential jurors paying attention to the press
for this trial" are aware that the question about criminal
intent was never resolved, Behre says.
"It's very hard to scrub that
entirely," Behre says.