dennis kozlowski yacht

Cap’n Kozlowski’s Ghost Ship

Selling a yacht is tricky when you’re in jail. Just ask Dennis Kozlowski , the former CEO of Tyco International, who’s serving at least seven years in prison for looting his company of $600 million. Kozlowski, whose lavish pre-jail lifestyle included a Fifth Avenue apartment, Nantucket and Boca Raton homes, and a Jimmy Buffett performance at his wife’s birthday party, has been trying to unload his 130-foot sailing yacht Endeavor for a year (price: $17.3 million). Built in the thirties to compete for the America’s Cup, it costs him over $1.5 million a year in upkeep, sailing around with its crew of nine, a sort of Flying Dutchman for billionaires. During the first weekend of April, it was in St. Barts’ “bucket regatta.” (New York real-estaters Harry Macklowe and Louis Cappelli also raced.) Every night during the regatta was an open house, with free booze and food and guided tours of the spacious interiors, which include rare sailing-yacht luxuries: a bathtub and fireplace. Next: Perk Season at New York’s Most Prominent Companies

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Disgraced former ceo’s dreams drown in for-sale yacht.

There’s a 147-foot hull bobbing in Mamaroneck harbor in Westchester that’s a sad reminder of the rise and fall of Dennis Kozlowski.

Kozlowski, the disgraced former CEO of Tyco International, commissioned the sailing yacht from Derecktor Shipyards before he was convicted in 2005 of taking $81 million in unauthorized bonuses.

The hull is for sale for just under $1 million. “We would love to finish the boat for someone,” a Derecktor spokesman said.

But it will take several million more to make it shipshape.

Locals have been curious about the abandoned hull. Former NBC News publicist Bill McAndrew, a Rye resident, told me, “It’s more of a puzzlement than an eyesore. It just sits there. If they can’t sell it, it would make a great planter.”

Kozlowski served more than six years in state prison before his release in January. A poster child for corporate greed, he once spent $6,000 for a shower curtain. At one over-the-top party he hosted, an ice sculpture of a chubby boy peed vodka.

And in 2006, he was forced to sell off a 130-foot yacht, The Endeavour — which was built to compete in 1934’s America’s Cup — for $13.1 million, to help pay court-ordered restitution.

On the Water: 'Ghost ship' floats in Mamaroneck Harbor

The aluminum hull of an unfinished, 150-foot yacht that was once owned by notorious tyco ceo dennis kozlowski is anchored in mamaroneck harbor.

Editor's note: From Memorial Day to Labor Day, Journal News writers will be telling weekly stories about people and places on the waterways we call home here in the Lower Hudson Valley. This story is part of the series.

MAMARONECK - The aluminium skeleton of an unfinished sailing yacht that’s massive enough to be seen on Google Maps bobs in Mamaroneck Harbor, about two miles from shore.

The metallic siding wrapped around the 150-foot boat's hull makes it look like a war vessel from the 1960s. The sleek, narrow design evokes the lines of a Baja speed boat. Graffiti, including the words “World Peace," is scribbled on one side.

So what is this vessel some people refer to as the "Ghost ship?"

“Some people think it’s an eyesore but more people are interested in it and have asked what is is,” said Harbormaster Joe Russo, who personally calls the boat “Noah’s Ark.”

“Kayakers and boaters love it,” he added.

USA Today: Kozlowski among 5 notable CEOs who fought the law and lost

Other Mamaroneck news: Downtown parking changes proposed

The state-of-the-art, multi-million dollar sailboat was going to carry former Tyco CEO Dennis Kozlowski on his travels around the world. Kozlowski commissioned Derecktor Shipyards to build the boat; German Frers, a renowned naval architect in Argentina, was brought on board to design it. The interior was to include a master suite, guest cabins, a kitchen, dining rooms and crew member cabins.

“She has been designed to be fast and seakindly,” Frers said in a brochure. “The elegant traditional style interior furniture, built using honeycomb and foam cores, is light and of the highest quality.”

Work began in Derecktor's Bridgeport, Conn. location in 2001 but was stopped by Kozlowski a year later - the same year he left Tyco and faced his first allegations of tax fraud. In 2005, Kozlowski was convicted of stealing hundreds of millions from Tyco, sending him to prison and ending his life of largesse.

After the shipyard closed its Bridgeport location in 2012, a tugboat brought the ship to Derecktor’s location in Mamaroneck, where it’s been ever since.

An official from Derecktor Shipyards did not return calls for comment.

The boat has been up for sale “as is” for $1 million for nearly a decade. Rex Herbert, a yacht broker from Sparkman & Stephens with 30 years' experience, has been involved in trying to sell the boat since 2010.

“There’s been interested parties, but no one has come to an agreement,” Herbert said. “I was working with one guy for about a year but we couldn’t agree on the final terms.”

Herbert said the interior is about 80 percent complete and the aluminum structure outside is about 90 percent complete, but the sailboat would still require a $20 million investment to complete the original plan.

“This is an opportunity to save one year in construction time and 30 percent below construction costs from a U.S. or Northern European shipyard,” Herbert said. “But right now, there is no machinery, plumbing, wiring, insulation, mast, winches, standing and running rigging.”

Meanwhile, Kozlowski, the man who became a symbol of corporate greed, was paroled in 2013 and is living a life of relative modesty in New York City.

Last year, he told The New York Times : “I was piggy. But I’m not that person anymore.”

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Endeavour's mystery buyer revealed

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Kozlowski's yacht fetches $13-million

This article was published more than 18 years ago. Some information may no longer be current.

Dennis Kozlowski, the imprisoned former Tyco International Ltd. C chief executive officer, has found a buyer for his historic 130-foot sailing yacht, the Endeavour.

Sempervirens Ltd. agreed to pay $13.1-million (U.S.) for the British-built yacht, according to court papers filed in New York. The original asking price was more than $17-million.

The sale will help Mr. Kozlowski, 59, pay $167-million in court-ordered restitution and fines as he serves a sentence of 8 to 25 years for looting Tyco. The former CEO has been trying for more than a year to sell the vessel, a 1934 America's Cup entry and celebrity craft in the yachting world.

"Someone would buy the boat for the same reason they would buy John F. Kennedy or Jackie O memorabilia," said Marcia Whitney of J Class Management Inc., whose president restored the Endeavour and has been chartering it to customers for private trips. "It's all about history."

State Supreme Court Justice Martin Shulman, presiding over Mr. Kozlowski's assets, gave the former executive permission to proceed with the sale in a court order filed Aug. 14 that included terms of the transaction.

The papers didn't describe the purchaser except to say it is linked to M&C Corporate Services Ltd. in Grand Cayman.

The Endeavour, a so-called J-Class vessel, was built for British aviation pioneer and yachtsman Thomas Sopwith to compete in the 1934 America's Cup, according to the website of the J Class Association.

The craft didn't win the Cup. It did win many races and admirers, the yachting group says.

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The New York Sun

When tyco’s ceo sold his yacht, no one knew who bought it – until now.

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

When L. Dennis Kozlowski, the former chief executive officer of Tyco International Ltd., sold his yacht, the Endeavour, to pay restitution for looting the company, the new owner was somewhat of a mystery.

The historic boat, a 1934 America’s Cup entry, was purchased September 28 for $13.1 million by Diversicolor Ltd., a Cayman Islands corporation, according to papers filed in New York state Supreme Court. The sales contract also named Sempervirens Ltd., another company with a Cayman address.

The real owner is a man named Cassio Antunes, a resident of Hawaii, who has big plans for the boat, according to a statement released by his Miami lawyer and people working on the boat in Newport, R.I.

Mr. Antunes, 44, has admired the yacht since he was a young boy and plans a significant refit of the sloop as well as a change in its home port to George Town, Cayman Islands, from Newport. He wants to race it again.

The new Endeavour owner is “an investor,” said Alexander Busher, a yacht broker with Edmiston & Co. in Monaco who handled the sale, adding he knew little more about him. “He’s a man who’s quite difficult to trace. He plays his cards quite close,” Mr. Busher said.

“This sailing vessel had captured the new owner’s attention more than 30 years ago,” Mr. Antunes said in a statement, “when Mr. Antunes, then a young boy, used to go to Italy and visit his grandfather’s large yachting library.”

Neither Mr. Antunes’s attorneys at Moore & Co. in Miami, nor people at the Newport shipyard would say what Mr. Antunes does for a living.

Mr. Antunes is the son of Maria Bonomi, 71, a well-known Brazilian artist, according to her adviser, Alexandre Martins, who answered her phone in Sao Paulo.

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THE FALL & RISE OF DENNIS KOZLOWSKI

Written By: Bruce A. Percelay | Photography By: Alexander Aguiar

From the classrooms of Harvard Business School to boardrooms across America, Dennis Kozlowski was long hailed as a corporate savant. Then, almost overnight, he became America’s poster child for greed, avarice and financial gluttony. As CEO of Tyco International , Kozlowski transformed a small obscure company into a wildly successful, multi-national conglomerate.

But perhaps equally spectacular as the rise of Tyco itself is the story of how a confluence of events led to the prosecution of the person who created this legitimate and enduring enterprise. The case that ultimately brought down Kozlowski raises troubling questions about how our legal system may have delivered a gross injustice to an individual who was guilty more of bad optics rather than criminal behavior.

The company’s success under Kozlowski’s leadership was nothing short of stunning. He took the company from $20 million in sales to $40 billion and built a conglomerate whose market cap exceeded Ford, GM and Chrysler combined. At one point, he was the highest paid CEO in America and his face graced the cover of virtually every major business magazine in the country.

If ever there were a perfect storm that could have sunk the career of an enormously successful and talented corporate icon, Kozlowski managed to find it and sailed directly into the eye of the hurricane. At the time, fraudulent business activities being perpetrated by companies like Enron, WorldCom and Global Crossing were front and center, and the media, which had previously glorified the success of many business leaders, turned into prosecutors of anyone who appeared to be profiteering at the expense of the American public.

Kozlowski’s widely publicized and nearly comic excesses through Tyco included his purchase of a $6,000 shower curtain and a multimillion-dollar birthday party in Sardinia. He became caught in the crosshairs of Manhattan District Attorney Robert Morgenthau , who was running for reelection at the time. Kozlowski appeared to become a target to serve as an example to the would-be abusers of the system regarding the pitfalls of unethical business behavior.

Even before his trial on a litany of charges, many of which were questionable, Kozlowski was convicted in the court of public opinion. Having already given up the bulk of his fortune in unprecedented fines, Kozlowski paid the price of losing his freedom for the next seven years as well as his reputation. The stories and videos detailing Kozlowski’s lavish spending were used to influence jurors and may have had a material effect on their guilty verdict, which at one point led to Kozlowski spending nearly a year in solitary confinement in a state prison.

By his own admission, Kozlowski made mistakes both stylistically and otherwise. A closer examination of the facts suggests that bad optics and the goals of the prosecution may have superseded the inherent tenet of the American justice system to provide an impartial trial. For a man who created enormous and enduring wealth for Tyco’s stockholders, Kozlowski’s fall from grace was legendary. N Magazine sat down with Kozlowski to talk about the experience, his passion for helping people unfairly convicted of crimes and his deep connection to Nantucket.

N MAGAZINE: How did you first start coming to Nantucket?

KOZLOWSKI: In the mid-seventies, I went out there with some friends. I had a co-worker who had a home on Nantucket. I enjoyed everything about Nantucket. The sense of community. The feeling of being away from things while still having this vibrant group living there. I took every opportunity to go back out to Nantucket. I was drawn to the island in a big way. In the early nineties, I built a house out there.

N MAGAZINE: You had modest beginnings, commuting from a small town in New Hampshire in a Volkswagen Beetle. What made you the ambitious person you were, and I presume still are?

KOZLOWSKI: I didn’t set out to become a person who built $150 billion of value. It just never occurred to me. But each step along the way, I saw opportunity. Each step along the way, I had the ambition to achieve more than my predecessor did. And then once you hired your people that are a reflection of your own thinking, growth starts growing exponentially. The team that we put together was the driving force of what we did at Tyco.

N MAGAZINE: Did you have mentors early on?

KOZLOWSKI: My most significant mentor was a high school teacher who put me on the school debate team and worked with me a lot to be a straight-forward, logical thinker. In high school, I also worked in the pharmacy in North New Jersey where there was pharmacist who encouraged me to be more ambitious.

N MAGAZINE: You first joined Tyco in 1975. The company had revenues of about $20 million. When you left, the revenues were $40 billion. Was the dramatic growth part of your initial vision, or did the expansion just kind of happen organically?

KOZLOWSKI: The first thing I did was put together a team of really good people. That team was able to accelerate growth faster than anybody thought possible. Our stock was selling at high multiples. This gave us the ability to sell or use stocks to buy other companies.

N MAGAZINE: It was once said you were married to Tyco. Was this type of devotion the key to your success, and did it also create a distortion for you as to your view of the company and whether you felt it was your company?

KOZLOWSKI: Absolutely. When you spend as much time with the company as I did, you don’t know if you’re Tyco when you wake up in the morning or if you’re Dennis.

N MAGAZINE: There was an evolution of Dennis Kozlowski, from a person of simple beginnings with limited exposure to then having all the trappings of success. As someone who became viewed as one of the most admired CEOs in the world, did you feel yourself becoming a different person?

KOZLOWSKI: I never felt that I was morphing into someone else. I always had the same view of who I was: a poor kid who got out of the tenements of Newark, New Jersey. What did happen is that I wanted to show my success. So I acquired some homes, a boat and things that I had little time to use. I was probably on [my sailing yacht] Endeavour ten nights a year. I was probably at my ski house in Bachelor Gulch maybe five or six nights a year over the holidays. So I don’t know the exact numbers, but I never used any of these assets when I acquired them.

N MAGAZINE: So they were trophies?

KOZLOWSKI: Strictly trophies. And trophies that I didn’t need, but it was kind of my way of keeping score.

KOZLOWSKI: There’s no doubt about it. Not only people in the media, but a few people on my board, also.

N MAGAZINE: For nearly twenty-seven years, the company grew exponentially. Seldom do people go after those who enrich them, but in your case, the board came out with steak knives. During your years at Tyco, you were both CEO and chairman. Did that type of control play into what many thought was your over-reaching in compensation?

KOZLOWSKI: You can debate chairman and CEO as one and the same forever. I could give perfectly good examples of where it works and when it doesn’t work. But chairman and CEO had nothing to do with my compensation. We had a separate compensation board—the compensation committee—who set the compensation. We had a senior executive, the head of human resources, who met with the compensation committee without me present. I did not attend compensation committee meetings. I never once calculated my own bonuses. Our finance group did the calculation, and the deal was that our outside auditors had to sign off on the compensation before I was paid.

The amount of my compensation was a $1 million base. The remainder was variable and at risk. I was paid in stock by how well the company’s earnings were. I owned stock like any other shareholder. I had to achieve certain milestones to be paid cash bonuses. As I met those milestones, typically our earnings went up and the stock went up. The stock doubled a few times over a number of years. Any- body that invested alongside of me was going to earn the exact same amount of money.

N MAGAZINE: In the terms of your compensation, you were to receive a full $112 million golden parachute and you were granted 800,000 shares of the stock. The board obviously supported this compensation. But by most objective standards, even now, that was a huge payday. Was this just presented to you? Or did you negotiate it?

So I went to our vice president of HR, and said, “The board offer is probably worth over $100 million dollars. Please go back to the board and tell them I want three times my annual compensation of the stock, the bonus and the salary.” I thought there was no way in hell that they would ever support that. To my surprise, they approved it. I thought that was bizarre but I was feeling like a pitcher for one of the top major league teams. I’m thirty-eight years old, my arm is wearing out, so now they give me this huge contract.

N MAGAZINE: So this was the true golden handcuffs.

KOZLOWSKI: This was the true golden handcuffs.

N MAGAZINE: Did it occur to you that it might come back and bite you?

KOZLOWSKI: I did not know it was going to destroy me. I was 100 percent certain that there would be a lot of criticism. But at the same time, we’ve created so much value that I rationalized the compensation.

N MAGAZINE: Did you lose sight of the fact that this was not your company, that it was a shareholder-owned public enterprise?

N MAGAZINE: With that in mind, if someone could be convicted of bad optics, you would be extremely vulnerable. There were a series of purchases you made at the pinnacle of your career that turned people’s perceptions of you. Let’s talk about something that’s also probably not wildly comfortable, but one of the most legendary events that maybe shaped people’s view of you and generated an inordinate amount of press was the fortieth birthday party in Sardinia.

KOZLOWSKI: The party was ridiculous. My daughters were there. Some Tyco directors were there. Some Nantucket friends were there with others. It was over the top. It was not tasteful at all. Other people put the party together and I was not involved. However, I did personally pay the cost of the party.

N MAGAZINE: In the same realm of unfortunate optics, there was the $6,000 shower curtain heard around the world. How much influence do you think the shower curtain and these other symbols had on the outcome of your case?

KOZLOWSKI: They had a significant influence because you could watch these poor juries sit there for four or five months listening about compensation committee meetings and audit committee meetings and return on investment calculations. Some of the jurors were either asleep or had their eyes glassing over. But when you can pop in things like a $6,000 shower curtain, which is more than a lot of people’s rent, the prosecution was able to identify me as a bad guy.

N MAGAZINE: In 2002, Global Crossing, WorldCom and Adelphia filed for bankruptcy. And they were charged with allegations of Enron-like accounting issues. The Wall Street Journal led the charge, suggesting that Tyco should somehow be included in this same group. Was this just bad reporting on behalf of a singular reporter at The Wall Street Journal ?

KOZLOWSKI: Mark Maremont of The Wall Street Journal spent ten years trying to find something wrong with Tyco. Mark was a bit of an unusual guy. We would have board meetings on Bermuda because Tyco was based there. Mark would sit outside of meetings in an effort to speak to directors afterwards. Mark spent a fair amount of time looking for something wrong with Tyco. This seemed to be his personal ambition. There was nothing impartial about Mark Maremont.

In fact, Mark came to the trial a few times and he identified a juror that he said had a hand signal to the defendants. No one else in the courtroom saw that, but Mark published that in The Wall Street Journal . So here is a reporter trying to influence the outcome of a trial by attending the trial and printing something that he thought he saw at the trial that really no one else saw at the time.

N MAGAZINE: Why was the Manhattan District Attorney Robert Morgenthau so enthusiastic about this case? Why was he so aggressive in his pursuit of you?

KOZLOWSKI: At the time, the federal government was prosecuting Enron, WorldCom, Martha Stewart. It was a time when the stock market crashed in 1989/90 and people had lost money in the market. CEOs and companies had been put on pedestals. Morgenthau was running for reelection and he was facing his first real challenge at the time. He had been district attorney for many years. He wanted to show that he was going to prosecute white-collar crime as well as the day-to-day crimes of New York.

N MAGAZINE: In his zeal, can you cite specific instances where he either tested the limits of the law or went over them?

KOZLOWSKI: I never once met Morgenthau. I never saw him in the courtroom. Morgenthau had a big press conference when he indicted me, and then I never heard or saw from him again. I didn’t even meet him at the indictment.

N MAGAZINE: But was he pulling the strings from behind the curtain?

KOZLOWSKI: He had to be because he was heading up the DA’s office. But where I think my rights were violated was Tyco had an attorney named David Boies who was a big-time celebrity lawyer. He was the attorney that the United States government hired when they wanted to break up Microsoft. When Al Gore and Bush were battling it out for the votes in Florida to become president of the United States, Al Gore hired David Boies. David Boies was brought in by a couple of directors to investigate me. His job was to win. It wasn’t to find truth and justice. It was to win—as simple as that. He was paid to win, so I would not have to be paid my retention agreement, which was worth hundreds of millions of dollars to the company.

David Boies handed the case over to Morgenthau, but then David Boies, who was being paid to find me guilty as a prosecutor, was allowed to testify in front of the jury as if he was an employee of Tyco or as if he had some kind of objective opinion about the case. Once Boies testified, my constitutional rights were violated

KOZLOWSKI: The behind-the-scenes prosecutor, David Boies was extremely good with the media, extremely good in opinion-making, and he fed all the information from Tyco to the prosecutor in a record couple of months. I left the company in June, and I was not under any kind of investigation for any spending or any issues at all. I was indicted in September. A nor- mal prosecutor’s office takes years to do these kinds of things.

In my opinion, they were handed a case by David Boies because of my retention agreement. That $300 million agreement was now coming back to bite me. My retention agreement was strongly worded. It said that the only time Tyco would not have to pay that retention agreement was if I was found guilty of a felony that was materially injurious to Tyco. So a couple directors got together and said, “We gotta find material injuries to Tyco because it’s embarrassing to show up at our country clubs and say, ‘We’re gonna be paying this guy all this money.’”

I never once had one discussion with a single director or anybody in that company from the day that I left on a Sunday and was indicted on Monday on sales taxes. I was never allowed back in the company. I was never allowed back to my notes, my records, my information, my personal belongings. On that fine Monday, David took over and totally locked me out from the office. I was told that David Boies hired a PR firm to disparage me. Before that I was on the cover of business magazines doing well, and now it came time to bring me down. I was instructed by my lawyers not to speak to the media. Our first trial was a hung jury and it was ultimately declared a mistrial.

After the first trial, the DA offered we negotiated, we could get it down to one to two years of prison time with a small fine. None of that happened. We went back to trial. They were able to pick up on these issues—the shower curtain, the spending, the personal lifestyle—as opposed to the facts.

N MAGAZINE: When the sentence came down it was eight-and-a-half to twenty-five years?

KOZLOWSKI: Yes.

N MAGAZINE: And you paid restitution?

KOZLOWSKI: I was hit with two financial obligations. One was a $100 million fine to the Manhattan DA’s office. I was also hit with full restitution to Tyco for everything I was paid, which was about another $100 million.

N MAGAZINE: So when this came down, what on earth was going through your mind when this was delivered?

KOZLOWSKI: I was shocked and I felt that an appeal process would turn this around.

N MAGAZINE: What do you feel you were guilty of? Were you guilty of anything, legally?

KOZLOWSKI: If the board changed their mind about my compensation or felt that I was overpaid, there was a civil process that should have resolved this – certainly not a criminal process. But nobody ever came to me and asked me to give the money back or do anything.

N MAGAZINE: In the broad sense, what were you guilty of?

KOZLOWSKI: I did push the organization hard and we built up a large company from nothing very quickly. We went from infancy to adulthood without passing through adolescence. And in that process, we never built the infra- structure or the documentation that most companies have to support the kind of growth we had. We didn’t have the lawyers or financial people on staff to support the large businesses that we were running. I was guilty of not building a corporate staff that was comparable to the size of the organization we were running.

N MAGAZINE: So ultimately, when you were sentenced, you spent eight and a half months in a maximum security prison. You were hardly viewed as dangerous. What was the justification?

KOZLOWSKI: They just didn’t know what to do with me. I was a high-profile inmate at the time, and the concern was that one of the gang members would get some notoriety by taking me out. So that was what was explained to me. They said, “It’s for your own good, because you are high profile.” But at the same time, inmates are savvy people. They know everything that’s going on. So everybody would be looking for some kind of help while you’re there too, seeking money. So part of that justification, too, was to keep me from being taken advantage of.

N MAGAZINE: And did you ever develop relationships with any of the prisoners, so that you felt you were able to steer them in the right direction?

KOZLOWSKI: Absolutely. I taught some people to get their high school equivalency in prison. And some of the books, the things they had were pretty archaic. And my brother-in-law was a special education teacher in New Jersey, so I had him send in all kinds of books and things they use, so we were able to have some better materials for some of the guys to use when they went for their exams.

N MAGAZINE: Did they realize who was teaching them?

KOZLOWSKI: To some extent. Someone might be reading a business book and one of the cases would be the Dennis Kozlowski Tyco case, and someone would surprisingly say, “This is you!”

KOZLOWSKI: I had many visits. These visits included [my now wife] Kim, who became very supportive. We met most Saturdays and Sundays and got to know one another over those years. We concluded that the criminal justice system is pretty screwed up and decided to do something about it when we had the opportunity. I came out and got involved with the Fortune Society of New York, which I now chair. We help thousands of former inmates transition into society every year. Kim is president of the Women’s Prison Association, and her group spends most of their time finding alternatives to incarceration for women. We have a passion for criminal justice reform and advocacy.

N MAGAZINE: Do you have any other thoughts or reflections about this experience?

KOZLOWSKI: If a CEO devastated a company, employees would stay away from him. But I had over a hundred employees visit while I was in prison. These were my senior staff, my secretaries, people up and down the organization. To this day, this group has been extremely supportive. That friendship and support has meant the world to me. I feel bad about what happened and the way it happened, but I feel good about the lasting relationships.

N MAGAZINE: You’re going to be coming back to Nantucket?

N MAGAZINE: Is there any feeling of trepidation?

KOZLOWSKI: It’s all very positive. The support from Nantucket has been overwhelming over the years. When the DA would not accept my money for bail, the people on Nantucket put up their homes, their boats, their businesses. Fortunately, it didn’t come to that, but they were right there for me. Absolutely right there. I will never forget that and I am forever grateful.

JOE KENNEDY III

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WORKING IN CONCERT

Watch CBS News

Dennis Kozlowski: Prisoner 05A4820

By Daniel Schorn

March 22, 2007 / 12:37 PM EDT / CBS

This segment was originally broadcast on March 25, 2007. It was updated on July 23, 2007.

A year ago or so, the air was thick with tales of corporate scandal, lost pension funds, big time theft and even bigger time prison sentences for the Enron gang. Then there was Dennis Kozlowski, CEO of Tyco, who was found guilty of – in effect – using Tyco's immense financial resources for what the prosecution described as his "own personal piggy bank."

You might remember the $6,000 shower curtain, and stealing over $100 million from the company.

60 Minutes correspondent Morley Safer wondered how the man, who could whistle up a corporate jet on a whim or throw a two million dollar birthday party, was doing in his reduced circumstances and what's it like to go from "king of the world," to prisoner #05A4820, serving eight to 25 years behind bars.

"In my wildest imagination, when I would project myself into my late 50's and early 60's, where I would be or what I would be doing. If I make a list of a hundred different places, or a hundred different things, here would never make that list," Kozlowski tells Safer.

He now earns a dollar a day, mopping floors and slinging hash to his fellow inmates. In January, Kozlowski spent a week in the hospital with a heart ailment and got to thinking.

Kozlowski has not really talked publicly until now; asked why he decided to speak now, he says, "When I was in the hospital in January, I was outside in the emergency room, feeling really uncomfortable and frightened. And that's when I've, you know, really made the firm decision that I wanted to go through and talk to you at this time."

He says he became very aware of his own mortality, and didn't want to leave the world "without at least an opportunity to talk about my side of the story, to the extent that I can talk about it."

He agreed to speak with one stipulation — that 60 Minutes would not include anyone else in this story.

Because of an appeal, he will not discuss the details of his case, but he will say he believes in the judicial system. "I think all that works. But in this case, the jury got it wrong."

That jury convicted him of 22 counts of grand larceny, conspiracy and securities fraud. His trials occurred in the wake of a white-collar crime wave: Enron, WorldCom and Martha Stewart.

The newshounds smelled blood. Accused of looting his company of hundreds of millions of dollars and living the life of a pasha at stockholder's expense, he was the living, breathing version of "Wall Street's" Gordon Gekko.

Up to a point: what is puzzling is why does a man who struggled so hard, so effectively to make it become so careless and stupid and arrogant? Born in a tenement on the wrong side of the tracks in Newark, N.J., Kozlowski worked his way through school.

"I played guitar in a band. I worked in a pharmacy. I worked in a carwash. So, you know, I had two or three jobs going at any given time, you know," he explains.

Where he grew up, Kozlowski says there weren't that many options. "Growing up in Newark, New Jersey, at the time, you know, you never thought of yourself growing up to become a CEO," he says.

He started at Tyco, then a small New Hampshire manufacturing company, as an accountant making $28,000 a year and worked his way up to CEO. He became known as "Deal-a-Day Dennis," constantly acquiring new businesses, and building Tyco from a $40 million company into a $40 billion conglomerate.

Wall Street couldn't get enough of the young aggressive CEO. He also began making staggering amounts of money, among the top earning CEOs in the country.

"We had a pay-for-performance culture at Tyco," explains Kozlowski. "So, most of the money I earned was in the appreciation of Tyco stock."

"One year you made, I think, $170 million," Safer remarks.

"I'm not sure 170, but I made over $100 million, yeah," the former CEO acknowledges.

Asked what it was like to earn that kind of money, Kozlowski says, "It's a way of keeping score, I guess."

Keeping score meant keeping up with the masters of the universe – $30 million to build a mansion in Florida, plus acquiring homes in Nantucket and Colorado. And for $16 million, he bought a vintage yacht, "Endeavour."

Wealth meant one thing, social acceptance another. He and his second wife Karen Mayo decided art was one way of getting it. They spent millions on paintings and he joined the board of the Whitney Museum.

For a pied-à-terre in New York, he had Tyco buy a $19 million apartment and decorated it with $11 million worth of stuff. The poor kid from Newark had made it to Fifth Avenue.

"Would Dennis Kozlowski, a few years ago, even [have] contemplated going to Europe to buy old master paintings?" Safer asks.

"No, absolutely not," Kozlowski admits. "You know, it came with earning the amount of money I was earning at the time."

Kozlowski says joining the board of the Whitney Museum wasn't his idea – he was invited. And he says he never made a board meeting.

"But you were invited because they like having really rich guys on the board, correct?" Safer asks.

"I assume it wasn't for my knowledge of art," Kozlowski says.

But it was the purchase of that art that would lead to his undoing. The Manhattan District Attorney's Office happened to be investigating art galleries that were helping customers avoid sales tax. Kozlowski had purchased $13 million worth of paintings, including a Renoir and Monet, for the Tyco apartment, but prosecutors said he had them shipped to Tyco's offices in New Hampshire – a state without sales tax. They were then trucked back to New York.

In 2002, The Manhattan District Attorney's Office indicted Kozlowski for evading over $1 million in sales tax and he resigned as CEO of Tyco.

But that was only the beginning. The Tyco board investigated its CEO's behavior and made public a report that was devastating; Kozlowski's excesses were revealed in excruciating detail.

Decorations for the New York apartment became classic tabloid headlines, mocking the CEO's taste and his greed, like the $15,000 doggy umbrella stand and the ultimate symbol of his downfall: a $6,000 shower curtain.

Kozlowski says the media coverage was "horrible." Yet he did sign off on the décor.

"I signed off on a decorator to decorate, you know, the Tyco apartment. And, beyond that, that was my involvement. I, the first time I heard about that shower curtain, the first time was after I was out of the company and I read about it in a newspaper. And I was calling around asking: 'Where is this shower curtain?' But to this day, I wouldn't know it if it fell on me," he tells Safer.

And then there was the 40th birthday party for Kozlowski's wife Karen on Sardinia. It was togas galore, a four day festival of flesh. Jimmy Buffett was flown in for the music and guests were treated to a special cake: an anatomically correct woman with exploding breasts.

The cost of the party was over $2 million; since Kozlowski claimed it was in part a work retreat, Tyco footed half the bill.

During the trial, jurors were shown a tape of the party. Kozlowski says it was "absolutely horrible."

"It was over the top, you know. I was taken aback by it, but I smiled and worked my through it, wanted the night to end as fast as I could," he recalls.

"Donald Trump called your behavior tacky," Safer remarks.

"Tacky? Tacky from Donald Trump?" Kozlowski replies. "Wow. But he would know."

Those excesses may have been tacky, but tacky doesn't send you to jail. Far more serious was the allegation that Kozlowski literally stole money from Tyco.

He and his second-in-command Mark Swartz were charged with stealing $170 million and pocketing an additional $430 million through the sale of company stock, while lying about Tyco's financial condition.

The prosecution accused Kozlowski of granting himself unauthorized bonuses and running hundreds of millions of dollars worth of personal expenses through interest-free Tyco loan programs. No expense was too great or too small to run through Tyco. None of this, claimed the prosecution, was authorized by the Tyco board.

"I am absolutely not guilty of the charges brought upon me," Kozlowski says. "There was no criminal intent here. Nothing was hidden. There were no shredded documents. Nobody was told not to say anything. All the information the prosecutors got was directly off the books and records of the company."

In the trial Kozlowski took the stand, and testified that everything he did was authorized. But he did not have a single document to prove it. He had already repaid many of the loans and claimed he was simply an overworked executive who left the details for underlings to handle.

"I was pushing the company, and growing the company and pushing all aspects of it to continue to grow and I just don't think we put enough infra-structure in place to support some of that growth," Kozlowski says.

"Yeah, but some of the lines got blurred, correct? Some of the lines between what was your money, what was Tyco's money became very fuzzy," Safer remarks.

"I think I did everything accordingly to you know, the way the programs were outlined, and the way it was done by my predecessors," he says.

Asked if there was a situation where the rules got lost, Kozlowski says, "Morley, as I said, you know, we're in appeal on this, and there's also civil litigation, so at this point in time I think we're crossing the line here."

The Tyco board had given Kozlowski virtual carte blanche and the one person Kozlowski said could clear it all up, the head of compensation, was dead.

Whatever Kozlowski did, it was clear that the Tyco board was not exactly meticulous in carrying out its oversight. But the jury believed that Kozlowski was guilty of grand larceny. Even so, Kozlowski believes he was a "dead duck" from the start.

"I was a guy sitting in a courtroom who made $100 million a year. And I think a juror sitting there just would have to say, 'All that money, he musta done somethin' wrong.' I think it's as you know, it's as simple as that," he says.

Kozlowski says he was done in by bad timing: the Enron and WorldCom catastrophes. He feels that most people believe that's what happened to Tyco—that employees were left high and dry. But Tyco remains a thriving $60 billion company.

"The company went on after I left there. The company is alive today. It's doing well," Kozlowski says.

Asked if it makes him angry to be lumped together with Ken Lay and Bernie Ebbers, Kozlowski tells Safer, "That just frustrated me to no end. These are companies that had financial and accounting schemes, that had major scams, and that wasn't Tyco. You know, this was a major pay dispute."

But the jury didn't see it that way. He was sentenced to eight to 25 years and ordered to pay restitution and fines of almost $200 million. It's unclear if he'll have any money left when he is released.

In the meantime, he spends much of his time in prison focused on his appeal. He can receive visitors on the weekends, but he says he has few friends left.

"In the final analysis, most of the people were close to you because of your power and your wealth?" Safer asks.

"That's correct. And they wanted to share in that. That was probably 90 percent of the people in my life," Kozlowski says.

And it is not just his friends who have left him – he and his wife Karen are divorcing.

Asked if the marriage was all about money, Kozlowski says, "Morley, we're in the middle of a divorce and agreement. I'm not going to say anything about that, you know, at this time."

He says he tries to stay positive. He's 60 years old now, but the harsh reality of his predicament is inescapable.

"When you're sleeping in jail, you wake up all the time because there's a light on all nigh. So you kinda wake up every hour, hoping and wishing and praying and hoping it was just a dream, you know. It's reality and it's where you are," Kozlowski says.

"Often times, guys get religion inside. Has that happened with you?" Safer asks.

"There's a spiritual side that, you know, I think about and reflect on from time to time. But that's personal and private, you know, within me," he replies.

"Yeah. And you've got the time to do it now," Safer remarks.

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TYCO’S WALKING A FINE LINE

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Passionate about world-class yacht racing, Tyco International Ltd. CEO Dennis Kozlowski has a yacht with a fitting name for the times, Endeavor.Kozlowski is striving to convince analysts and investors that Tyco is not only afloat, but also will be a stronger company. He argues that Tyco is undervalued and needs to sell some businesses and […]

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Tyco Details Lavish Lives Of Executives

By Andrew Ross Sorkin

• Sept. 18, 2002

Tyco International, whose former top executives have been indicted on charges of looting the company, said yesterday that it had uncovered a web of deception and personal enrichment that spread throughout its management ranks.

The report provided details to fill in what had been previously sketched: Tyco's former chief executive, L. Dennis Kozlowski, systematically created a corporate culture of greed and excess, secretly authorizing the forgiveness of tens of millions of dollars of loans to dozens of executives to keep their loyalty. At Mr. Kozlowski's direction and without board approval, 51 Tyco employees received $56 million in bonuses -- and $39 million more to pay the taxes on the bonuses -- that offset loans extended by the company.

The report itemized tens of millions of dollars in personal spending that Mr. Kozlowski made with company money. They include his $16.8 million apartment on Fifth Avenue -- along with $3 million in renovations and $11 million in furnishings -- and a $7 million apartment on Park Avenue for his former wife.

According to the report, he also had the company secretly pay for personal items like an $80,000 American Express bill; a $72,000 fee to Germán Frers, a yacht maker; a $17,100 traveling toilet box; a $15,000 dog umbrella stand; a $6,300 sewing basket; a $6,000 shower curtain; $5,960 for two sets of sheets; a $2,900 set of coat hangers; a $2,200 gilt metal wastebasket; a $1,650 notebook; and a $445 pincushion.

The report is a result of a four-month internal investigation conducted by David Boies, the lawyer who represented the government in its antitrust case against Microsoft. The extensive review is intended to help the company move beyond the scandal and show that the new management has ended such excesses and now stands behind the company's financial reports. But questions remain about accounting practices and whether the corporate culture of excess has been rooted out. In fact, many employees who received loans that were later forgiven -- and all signed confidentiality agreements as a condition of the deals -- are still on the payroll.

Mr. Kozlowski and Tyco's chief financial officer, Mark Swartz, appear to have forgiven loans of executives at almost every level, according to the report, including the vice president for human resources, Patricia Prue, who processed the paperwork to forgive many loans.

In September 2000, Ms. Prue asked Mr. Kozlowski to provide documentation that the board had authorized one loan forgiveness program, according to the report. He wrote her a memorandum, without ever discussing the subject with the board, saying: ''A decision has been made to forgive the relocation loans for those individuals whose efforts were instrumental to successfully completing the TyCom I.P.O.,'' or initial public offering of stock. Ms. Prue received a $748,309 loan under that program, a loan that was forgiven, and $521,087 to pay the taxes.

Jerry Boggess, who heads the fire and security unit; Irving Gutin, the company's former general counsel; Jeffrey Mattfolk, an acquisitions executive; Brad McGee, chief strategy officer; Michael Robinson, the treasurer; Scott Stevenson, a tax executive; and Ms. Prue received a total of $13,534,523, plus $9,424,815 to pay associated taxes. The forgiven loans ranged from $748,309 to $5 million.

Tyco said that the employees did not know that the forgiven loans were not approved by the board. Tyco said that many other loans were now being paid back.

It is unclear what may happen to the other executives listed in the report, which was also furnished to the Manhattan district attorney and filed with the Securities and Exchange Commission. The district attorney has said that the investigation is continuing and has not ruled out charging more executives with crimes.

In a memorandum included in the report, Mr. Kozlowski said the bonus and loan programs were approved by Phil Hampton, who was then the chairman of the Tyco compensation committee; he died last year.

The undisclosed loans came from programs Tyco created to help employees pay taxes on stock and to help employees relocate near Tyco's offices.

The investigation concluded that in one loan program ''forgiveness was offered to some people who never moved, some people at the operating division level who were never part of the corporate relocation to Florida and people who did not even have a Tyco mortgage.''

According to the report, Mr. Kozlowski improperly borrowed about $61.7 million to buy real estate and other properties; Mr. Swartz improperly borrowed $33.1 million; and the former chief corporate counsel, Mark Belnick, improperly borrowed $14.6 million.

The report also detailed a secret compensation agreement between Mr. Kozlowski and Mr. Belnick, directly tying Mr. Belnick's yearly bonus to Mr. Kozlowski's bonus. Mr. Belnick was charged with falsifying business records to conceal loans he obtained from the company totaling more than $14 million.

At a bail hearing yesterday for Mr. Kozlowski and Mr. Swartz -- who have been charged with a $600 million fraud scheme and have maintained their innocence through their lawyers -- prosecutors objected to various assets being pledged for bail, saying the assets were obtained through criminal activity. A Manhattan judge will decide whether the assets are acceptable to the court.

In a show of apparent frustration, the lawyers for each man addressed the issue at the hastily scheduled hearing yesterday. Stephen Kaufman, who represents Mr. Kozlowski, told Judge Michael Obus that the prosecutor objected to an offer by Mr. Kozlowski's former wife's to put up her $10 million house in Greenwich, Conn., and $10 million in municipal bonds. Mr. Kozlowski's bail is set at $100 million.

Mr. Swartz's bail is $50 million. They are expected to post 10 percent of those amounts at a court appearance on Thursday.

John Moscow, the prosecutor, told the court, ''It does not seem to be appropriate that the proceeds of these crimes should be used as bail.''

Judge Obus expressed concern about how he could determine whether the assets were tainted by crime. After a short recess, Judge Obus said, ''I don't see how I could resolve this now based upon what's before me.'' He said he would grant the defendants liberty until the matter was resolved.

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A charge thrown out against ex-Tyco execs

A state court judge, after sitting through five months of testimony, threw out one of the most serious charges on Friday against the former chief executive and chief financial officers of Tyco International.

Former CEO L. Dennis Kozlowski, 57, and former CFO Mark Swartz, 43, remain on trial in Manhattan’s state Supreme Court for allegedly stealing $170 million from Tyco by hiding unapproved pay and bonuses and by abusing loan programs.

They also are accused of illegally making another $430 million by pumping up the value of Tyco stock through lies about the company’s finances from 1995 to 2002.

The two are still charged with grand larceny, falsifying business records and violating state business laws.

State Supreme Court Justice Michael Obus dismissed the enterprise corruption charge against the pair.

“The court does have serious reservations about the applicability of the enterprise corruption count,” Obus ruled, adding it did not meet statutory requirements.

The enterprise corruption count was modeled after the federal RICO statute, often used to bring down organized crime operations or mobsters like John Gotti.

Although the enterprise corruption count was thrown out, it would not affect the amount of jail time facing the two executives if they are convicted. The other top count, grand larceny, carries the same 25-year penalty, and the pair could face up to 30 years in prison.

Obus’s ruling came as the jury took a weeklong break before returning on Monday to hear final arguments in the extraordinarily lengthy case.

On Tuesday, defense lawyers had urged the trial judge in a session outside the jury’s presence to dismiss all the charges, offering a variety of arguments. The judge rejected most of them.

Assistant District Attorney John Moscow alleged that Kozlowski and Swartz misused Tyco’s relocation loans and Key Employee Loan Program (KELP) for purposes other than intended.

“The guys agreed they would take the money and call it a key employee loan,” Moscow said. “That’s what you call stealing.”

KELP was created to help Tyco executives pay off tax bills from their stocks, rather than forcing the officials to sell off some of their Tyco stock to cover that expense.

But Swartz tinkered with the program provisions and diverted the money to pay for New York private schools — “and Tyco ends up paying for his kids’ yearbooks,” Moscow said.

Some of the looted money was used to purchase and decorate an $18 million Fifth Avenue apartment used by Kozlowski, prosecutors alleged. The opulent residence was home to amenities that included a $15,000 umbrella stand and a $6,000 shower curtain.

Kozlowski also allegedly used the money to finance an extravagant 40th birthday party for his wife, held on a Mediterranean island for 75 revelers. Swartz’s take included an $8 million loan used to finance homes in Florida, New York City and New Hampshire, prosecutors alleged.

Tyco, which has about 270,000 employees and $36 billion in annual revenue, makes electronics and medical supplies and owns the ADT home security business.