NEW YORK — Two former top executives of Tyco International Ltd. were convicted Friday on multiple charges that they looted the company of more than $600 million in a case that came to symbolize excess and greed amid a recent wave of corporate corruption trials.
After four months of arguments and 11 days of deliberations, a jury found former chief executive L. Dennis Kozlowski and former chief financial officer Mark Swartz guilty of charges including grand larceny, securities fraud and eight of nine counts of falsifying business records.
In all, each man faced 22 guilty verdicts.
"Today is a day of disappointment, but there's still hope," Kozlowski's attorney Stephen Kaufman said outside the Manhattan courthouse. "We look forward to the appeal and we have confidence in that appeal."
Swartz also plans to appeal, his attorney, Charles Stillman, said.
The two men are due back at New York State Supreme Court on Aug. 2 for a pre-sentencing hearing, Kaufman said. They face up to 30 years in prison.
Tyco, owner of ADT security, is a manufacturing conglomerate that makes medical and electronics supplies and security and fire-protection systems. It operates from New Jersey but is based in Bermuda.
Prosecutors said the two executives funded lavish lifestyles with money stolen by abusing loan programs and hiding unapproved pay and bonuses. Even more cash came from inflating Tyco stock with lies about company finances, prosecutors said.
Kozlowski, 58, and Swartz, 44, testified they were not aware they did anything wrong and never intended to commit a crime by accepting bonuses and forgiven loans. Part of their defense was that payments were verbally approved by a director who is now dead.
Prosecutors "were able to get a New York jury to say this was just too incredible a story," said John C. Coffee, a Columbia Law School professor who specializes in white collar crime and securities fraud.
The conviction comes amid some recent setbacks in the government's fight against corporate misdeeds.
Last month, the Supreme Court overturned the criminal conviction of Arthur Andersen, Enron Corp.'s accounting firm. Last week, a jury acquitted former Bank of America Corp. broker Theodore Sihpol of 29 counts in a trial involving charges of improper mutual funds trading.
"There's been a lot of questioning about whether prosecutors could secure convictions in white collar cases," Coffee said.
He said the Tyco verdict adds to the track record of experienced prosecutors winning many cases of corporate wrongdoing. Convictions in recent years include those of WorldCom chief executive Bernard Ebbers and Adelphia Communications Corp. founder John Rigas and his son, Timothy.
Former HealthSouth Corp. chief executive Richard Scrushy is awaiting a jury verdict on federal fraud charges in Birmingham, Ala. The trial of former Enron Corp. executives Kenneth Lay and Jeffrey Skilling is slated for early next year.
This was the second trial of the Tyco pair. The first prosecution in April 2004 ended in a mistrial after a juror already at the center of courtroom controversy received a menacing letter and phone call.
The juror, a 79-year-old former teacher with a law degree, had made what appeared to be an "OK" gesture as she passed defense lawyers.
After the alleged gesture, the Wall Street Journal's Web site identified the woman by name and the New York Post displayed a front page sketch of her making an "OK" sign with the headline "Ms. Trial." The juror denied making a gesture.
Legal experts said prosecutors originally focused too much on the executives' extravagant spending, dragging the first trial out for six months.
Prosecutors showed a video of a $2 million birthday party Kozlowski threw for his wife on the Italian island of Sardinia. Tyco paid about half the cost of the party, which included scantily clad models in Roman costumes mingling with guests.
Kozlowski also spent Tyco funds to decorate his company-owned $18 million Manhattan apartment, including $15,000 for an umbrella stand and $6,000 for a golden-colored shower curtain in the maid's bathroom, prosecutors said.
The government simplified its strategy for the second trial.
"The first time around they had just used shovels to throw evidence in front of the jury of conspicuous consumption without clearly tying it to fraud," Coffee said. "This time they were more careful about focusing on the issue of whether the loans that were forgiven and other payments were authorized."
The defense also changed tactics by having Kozlowski testify, unlike the first trial. Kozlowski said he did no wrong and never stole from Tyco.
However, prosecutors pounced on the fact that Kozlowski could not explain why he did not include a $25 million loan forgiveness that he received as a bonus on his 1999 tax return.