Mistrial declared by Tyco judge

Action comes after juror in fraud trial threatened

deliberations in 12th day

April 03, 2004|By Robert Little | Robert Little,SUN STAFF

The larceny and fraud trial of two former Tyco International executives crumbled yesterday in a New York City courtroom, six months after it began, when one of the jurors who had been deliberating for the past two weeks received a threatening letter that prompted the judge to declare a mistrial.

The development was a setback for the prosecution of former Chief Executive Officer L. Dennis Kozlowski, whose $6,000 shower curtain and $2 million toga party had set a new standard for executive excess, but analysts and legal observers doubt that the aborted trial will have any effect on a future trial, or on any other high-profile corporate fraud cases.

Prosecutors issued a statement calling the mistrial "unfortunate" and pledged to seek a new trial "at the earliest opportunity."

Many noted the irony, though, that one of the nation's more spectacular white-collar fraud trials was unraveled largely by the doings of someone who can typically be relied on to lead today's fight against corporate greed and corruption - a juror.

FOR THE RECORD - An article in Saturday's editions mischaracterized the nature of the federal charge against Credit Suisse First Boston banker Frank Quattrone. He is charged with obstruction, but not with fraud.

"You have to see this as a reversal of fortune," said Robert A. Mintz, a former federal prosecutor and now a private-practice attorney who specializes in white-collar crime. "This is a tough environment for white-collar cases. In just about every one of these cases there's sentiment out there that it's open season on corporate executives - that the public and the juries are out for blood."

The mistrial came after a 79-year-old juror thought to be holding out for acquittal - referred to in court as Juror No. 4 but dubbed "Ms. Trial" by a New York tabloid - received some sort of threat that Manhattan State Supreme Court Justice Michael Obus did not describe.

Some news organizations reported that the juror had flashed an "OK" sign at the defense team last week, and she was thought to have been a key reason that jury deliberations had dragged on to a twelfth day yesterday.

The abrupt end also came, according to another juror, just minutes before the panel was prepared to issue guilty verdicts on some of the two dozen counts lodged against Kozlowski and his top assistant, Mark Swartz. Charges against them included securities fraud, conspiracy, grand larceny and falsifying business records.

"We literally were within minutes," juror Peter McEntegart, 34, a writer for Sports Illustrated, told CNN. "That's difficult for me right now."

Yesterday's development was not the first time that a fickle juror helped to derail one of the many multimillion-dollar fraud charges to grip corporate America in the past few years.

The obstruction case against Credit Suisse First Boston banker Frank Quattrone, a trader who made a fortune in the dot.com boom and was accused of interfering with a federal investigation, ended in a hung jury last year. It is scheduled for a new trial April 13.

Court watchers doubt, however, that the Tyco case collapse indicates any softening resolve among American juries, which have become severe when confronted with anything that smacks of executive extravagance or corporate greed.

"I can tell you, from a defense perspective, I dread the prospect of taking a corporate fraud case to a jury these days," said David Gourevitch, a former prosecutor and now a private attorney in New York who specializes in white-collar defense work. "Juries have very little sympathy for corporate executives, and they're offended by the dollar amounts involved in these cases. That makes this mistrial that much more unusual."

Former Tyco CEO Kozlowski and Swartz, a former chief financial officer, were accused of stealing $170 million from the company and reaping $430 million more by manipulating the value of the company's stock, then using much of the money to buy houses, yachts, jewelry and gifts for their wives and girlfriends.

The accusations were made all the more fantastic by video images, presented by prosecutors, that showed Kozlowski's lavish $18 million Manhattan apartment and a toga-themed birthday party in Sardinia for his second wife, much of it paid for with Tyco funds.

As a corporate fraud case, the Tyco trial was in crowded company. Executives from Enron Corp., HealthSouth Corp., WorldCom, Adelphia Communications Corp. and Qwest Communications International are all awaiting trial on charges that they somehow misled investigators or defrauded investors.

Homemaking celebrity Martha Stewart was found guilty last month of conspiracy, obstruction of justice and making false statements, after a trial in which she was accused of lying about her attempts to conceal a questionable stock trade.

Stewart's attorneys asked for a new trial this week, claiming that one of the jurors on her case - who declared her conviction a win "for the little guy" after the verdict - lied on a juror questionnaire about previous brushes with law enforcement.

Despite the obvious parallels, Mintz said that Stewart would be wrong to look to the thwarted Tyco case for inspiration.

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