NEW YORK — A former director of Tyco International testified Wednesday that when he asked Mark A. Belnick, the company's former top lawyer, what connection a house in Utah could have to Tyco, Belnick replied that his family liked it.
John F. Fort, former chief executive and director of Tyco, said he raised the subject during a three-hour flight while he, Belnick and Tyco director Joseph Welch were on Fort's private airplane. They were returning from a board meeting in Bermuda.
Fort testified that he was trying to learn why a Tyco relocation loan of several million dollars had been used to buy a house for an executive in the ski resort town of Park City. Fort said he understood that loan was about $10 million.
"I asked him about the Utah house," Fort said of the airborne encounter in February 2002 when Fort was a member of Tyco's board. Under cross-examination by Belnick's lawyer, Reid Weingarten, Fort said, "I asked him what connection it could have to the company. He said his family liked it."
According to Summit County records, Belnick and his wife, Randy, received their first tax notice on the Park City property in 1999. The home in the upper Deer Valley area is valued at $2.8 million, according to the county.
Fort said other directors at the board meeting earlier that day in Pembroke, Bermuda, had learned about Belnick's loans but did not ask the lawyer about them and did not appear to be upset with him.
Tyco's then-CEO, L. Dennis Kozlowski, had explained the loan by saying Belnick "had a small office out there and he could work out of there from time to time," Fort said.
Fort was testifying in state Supreme Court where Belnick is on trial on charges of stealing as much as $17 million from Tyco. Prosecutors say he accepted bonuses from Kozlowski that he, as Tyco's top legal officer, knew were illegal.
Belnick is also accused of taking out some $14.8 million in unauthorized interest-free relocation loans without board approval. Prosecutors say he used that money to buy an apartment near Central Park in New York and the Utah house.
Belnick is charged with first-degree grand larceny, securities fraud and falsifying business records. He faces up to 25 years in prison if convicted of grand larceny, the top count.
Weingarten said during his opening statements that Belnick accepted the bonus because he reasonably believed that Kozlowski was authorized to give it to him.
Prosecutors say Kozlowski gave Belnick the $17 million and approved the improper use of the relocation loans because the lawyer protected Kozlowski during a federal probe of Tyco's accounting practices and an investigation by an outside law firm.
Fort, who had been Tyco's CEO from 1982 until mid-1992 when he was replaced by Kozlowski, said he fired Belnick upon becoming interim CEO in June and July 2002, after Kozlowski was forced out following his indictment by a Manhattan grand jury.
Fort said he fired Belnick because he was refusing to cooperate with an investigation of Tyco that was being conducted by an outside law firm.
Meanwhile, Ruth Bennett Jordan, who had been a juror in the six-month trial of Kozlowski, 57, and Mark H. Swartz, 43, Tyco's former chief financial officer, entered the courtroom to hear the Belnick trial shortly before noon.
"I just wanted to see what was going on, general curiosity" said Jordan, the former Juror No. 4, who received a menacing letter and telephone call after her name was printed in some news reports. That contact prompted Justice Michael Obus to declare a mistrial.
A retrial of Kozlowski and Swartz is expected later this year or early next year.