Competitive Intelligence

Tyco Fraud & Corruption Charges Against Kozlowski & Swartz Ends in Mistrial

The corruption trial of two former Tyco International executives ended in a mistrial last Friday after an apparent holdout juror received a threatening letter, leaving the judge with "no choice" but to halt the 12-day-old deliberations.

The juror, who last week appeared to give defendant Dennis Kozlowski an approving hand signal, had received the letter in the previous 24 hours, courtroom sources said.

State Supreme Court Judge Michael Obus, visibly upset and with a quaking voice, said it was a "shame" the judicial process could not be protected.

"I have no choice but to grant a mistrial," Obus said, citing "outside pressure" on one juror. The mistrial ended a six-month-long trial for Kozlowski, Tyco's former chairman, and Mark Swartz, its ex-CFO, who were accused of looting the conglomerate of $600 million in one of the biggest corporate corruption cases in U.S. history. Manhattan District Attorney Robert Morgenthau said his office would seek a retrial.

Defense attorneys sought a mistrial all week, arguing that media exposure of the juror, 79-year-old Ruth Jordan, prevented the panel from reaching a fair verdict. The retired teacher and lawyer sparked the controversy last week when she made what was widely reported as an "OK" hand gesture toward the defense.

That followed jury complaints to the judge about a "poisonous" atmosphere in the deliberation room. Jury notes indicated most panelists were leaning toward guilty verdicts.

"My greatest interest is, and always has been, to do the right thing in my role as a juror in this case," Jordan said in the statement. "I do not know that I could express additional views at this time. After Jordan's identity was revealed by the media, she became the topic of scathing Internet chatter, and one source described the letter she received as threatening.

But, in a Reuters piece that explains some of the dynamics at work that caused the mistrial, excerpted below, the jury supposedly rallied around Jordan:

When an elderly juror in the corruption trial of former Tyco International Ltd. executives was mocked by a newspaper, the rest of the panel rallied around the 79-year-old woman who once baked the group a carrot cake.

The jury put aside bickering and harsh feelings toward juror No. 4 Ruth Jordan, said Mark Glatzer, a juror in the case, who talked to Reuters on Saturday evening.

In addition to its front-page sketch of Jordan, the Post joined the Wall Street Journal in printing her name, which is seen as taboo in the United States, and called her a "batty blueblood" in a second story.

"She's 79 years old and she's on the front page of the Post, which is making fun of her," Glatzer said. "Juror No. 7 called me and other jurors and told us to call Ruth and give her support. I was horribly worried for her."

The six-month trial ultimately collapsed on Friday when New York State Supreme Court Judge Michael Obus declared a mistrial. Obus cited "outside pressure" on Jordan who received a letter that had unnerved her. She had also received a threatening telephone call after newspapers reported her name and that she was on the jury, Glatzer said.

He said jury deliberations were a free-for-all from the very start. Jordan frustrated the group by constantly shifting her arguments or voting guilty on a count only to change her mind later.

"She was just dancing around," Glatzer said. "Tempers flared and people said things they wished they didn't say," Glatzer recounted. "(Jordan) could hold her own."

After Jordan's identity was disclosed, she returned to the deliberations room with a change of heart.

"She said she realized that maybe her opinion of reasonable doubt was too strong and she was willing to change it," Glatzer said. "And she said she was going to vote guilty on (a grand larceny count)."

Jordan's shifting stance unsettled Glatzer. He said he feared she was voting guilty because she had been terrorized by the media coverage. He then changed his guilty vote to an abstention on the grand larceny count that accused Kozlowski and Swartz of making a secret $20 million payment to a director.

"It was not a winning situation. It was insane," he said.

Swartz's attorney Charles Stillman said: "I've been doing this 40 years. I tell you, if I piled up all the experiences top to bottom, I ain't seen nothing like this yet."

Juror Peter McEntegart told CNN the panel had been on the verge of a verdict. "We virtually had a verdict yesterday afternoon," he said, but the panel opted to return on Friday for what they thought would be another few minutes of deliberations. "We thought it would be another 10, well, nothing takes 10 minutes in this trial, but half-hour or an hour and we would have been done," he said. Instead, he said, "we literally were not allowed to deliberate today at all."

Juror Adrienne McWilliams told New York's WABC radio that Kozlowski and Swartz would have been found guilty on some counts but not others. Experts said the ruling was a setback for prosecutors, who levied a 32-count indictment accusing the pair of securities fraud, grand larceny and corruption. But while the defense now has the advantage of having heard the evidence, the 11-to-1 jury split could push the defense toward a plea deal.

Kozlowski and Swartz built Tyco into one of the world's largest conglomerates by buying hundreds of companies, and the case was considered a pivotal prosecution in the wake of other U.S. corporate scandals, such as Enron and WorldCom, as well as Martha Stewart's high-profile conviction only days ago.

The judge warned that the media's public mockery of the 79-year-old schoolteacher, Ruth Jordan, could deter citizens from serving on juries. Disappointed jurors said they had been on the verge of delivering several guilty verdicts. The government accuses the two executives, L. Dennis Kozlowski and Mark H. Swartz, of stealing $600 million from the company. In the second trial, prosecutors are expected to focus less on the executives' lavish lifestyles and more on their criminal intent. Kozlowski and Swartz still face tax-evasion charges and multiple civil suits from Tyco and Tyco shareholders after the retrial.

But, both the prosecution and defense should welcome a new trial. The media - the Wall Street Journal and New York Post - was the real culprit in identifying Ruth Jordan, but her behavior probably warranted a mistrial anyhow. Despite the executives' greed, the prosecution shouldn't be focusing there - criminal intent is the real issue and proving that the next time around will ensure these two won't get off more lightly than they should.

- Arik

Posted by Arik Johnson at April 4, 2004 05:01 PM | TrackBack