In the latest move against alleged corporate fraud in the United States, two former executives were indicted in New York Thursday for allegedly robbing the conglomerate Tyco of hundreds of millions of dollars.
A grand jury indicted former Tyco chief executive Dennis Kozlowski and the corporate giant's former chief financial officer, Mark Swartz, of stealing more than $170 million from the corporation and taking hundreds of millions more through fraud and security sales.
They were charged with grand larceny and corruption in a criminal court. Manhattan District Attorney Robert Morgenthau said the executives, who pleaded not guilty, were also accused of "defrauding investors by falsifying records, concealing material information and providing false information to Tyco's stockholders and board of directors." "The board of directors either did not know or did not take any action," he said. "Auditors, lawyers, you look to a system of checks and balances in corporate governance and there were none here." Shortly before the indictment, the U.S. government's Securities and Exchange Commission, which investigates corporate dealings, announced that it was filing civil charges against former Tyco executives. The executives were accused of failing to disclose millions of dollars in low to no-interest loans they received from the company, allegedly for personal use.
Mr. Swartz's attorney reportedly denied the allegations. Mr. Kozlowski's attorney refused to comment on the charges. Earlier this year, Mr. Kozlowski was charged with tax evasion involving million dollar art purchases. He resigned from the company in June.
If convicted, the former executives could receive up to 25 years in prison.
A former attorney associated with the company has also been charged with falsifying company records to conceal loans he received from Tyco.
The company, that manufactures products ranging from toys to coat hangers, is currently under new management.
During the past year, several large corporations in the United States have been accused of accounting fraud and executive theft, causing high-profile bankruptcies and a drop in investor confidence on Wall Street.