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... using Tycho'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. He 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. What's it like to go from king of the world to prisoner number 05A4820, serving 8 to 25 years behind bars? Once again, Dennis Kozlowski.
We caught up with Dennis Kozlowski at Mid-State Correctional Facility in Upstate New York. How are you doing? I'm doing okay. Guests include murderers, drug dealers, and pedophiles. And the odd multi-millionaire.
In my wildest imagination, when I would project myself into my late 50s and early 60s, where I would be or what I would be doing. If I make a list of 100 different places or 100 different things, here would never make that list. He now earns a dollar a day mopping floors and slinging hats to his fellow inmates.
In January, Kozlowski spent a week in hospital with a heart ailment and got to thinking. You've not talked publicly up till now. Why did you decide to do it? When I was in the hospital in January, I was outside the emergency room feeling really uncomfortable, frightened, and that's when I really made the firm decision that I wanted to go through and talk to you at this time.
You became aware of your own mortality. Very much so. And you didn't want to leave this world without me. 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 we would not include anyone else in this story.
Because of an appeal, he'll not discuss the details of his case, but he will say... I believe 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 trial... Crimes occurred in the wake of a white-collar crime wave.
Enron, WorldCom, and Martha Stewart. The newshound smelled blood. Accused of looting his company of hundreds of millions of dollars and living the life of a pasha at stockholders'expense, he was the living, breathing version of Wall Street's Gordon Gekko. Grief, for lack of a better word, is good.
Up to a point. What's puzzling is why does a man who struggled so hard, so effectively to make it, become so careless or stupid or arrogant? Born in a tenement on the wrong side of the tracks in Newark, New Jersey, Kozlowski worked his way through school.
I played guitar in a band, I worked in a pharmacy, I worked in a car wash, I had two or three jobs going at any given time. Where you came from, there weren't that many options. Newark, New Jersey at the time.
You know, you never thought of yourself growing up to become a CEO. 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 companies and building Tyco from a $40 million company into a $40 billion conglomerate.
I would like to become all things equal, 100%. billion dollar company wall street could not 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 so most of the money i earned was in the appreciation of tyco stock one year you made i think 170 million dollars not sure 170 but i made over 100 million yeah well more money than anything 10 million there who cares but what's it like to earn that kind of money 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 Boca Raton, acquiring homes in Nantucket and Colorado, and just loose change, $16 million for Endeavor, a vintage yacht. Wealth meant one thing, social acceptance another. He and his second wife, Karen Mayo, spent millions on painting. He joined the board of the Whitney Museum. For a pied-à-terre in New York, he had Tycho buy a $19 million apartment.
and decorated it with 11 million dollars worth of stuff. The poor kid from Newark was stepping out on Fifth Avenue. Would Dennis Kozlowski a few years ago even contemplated going to Europe tonight?
or mastered paintings? No, absolutely not. You know, it came with earning the amount of money I was earning at the time. Was it your idea, or were you invited to join the board of the Whitney?
Oh, it was not my idea at all. I was invited to join the board, and I never made a board meeting. Yeah. You were invited because they like having really rich guys on the board. I assume it wasn't for my knowledge of art.
But it was art that would lead to his undoing. The Manhattan District Attorney's Office was investigating galleries that were helping customers avoid sales taxes. Kozlowski had purchased $13 million worth of paintings, including a Renoir and Monet, for the Tyco apartment.
But prosecutors said he had some of 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 a million dollars in sales tax, and he resigned as CEO. 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. The $50,000 doggy umbrella stand and the ultimate symbol of his downfall, that $6,000 shower curtain.
The coverage was really punishing. That was horrible. As overblown as the coverage may have been, you signed off on those.
I signed off on a decade. to decorate the Tyco apartment and beyond that that was my involvement. 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's the shower curtain but to this day i wouldn't know what if it fell on me so then there was the 40th birthday party for kozlowski's wife karen in sardinia It was Toga's Galore, a four-day festival of flesh. Let's rock! Hey, where did we go?
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 was over $2 million, since Kozlowski claimed it was in part a work retreat for Tycho footed half the bill. Was it embarrassing for you, though, when they slayed that tape?
It was kind of Roman. Orgy going on. Horrible.
It was over the top. Oh, look at that. I was taken aback by it, but I smiled and worked my way through it.
Wanted the night to end as fast as I could. Donald Trump called your behavior tacky. Tacky? Tacky from Donald Trump? From Donald Trump.
Oh. Well, 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, claims the prosecution, was authorized by the Tyco board, and the jury agreed. Guilty.
But he's still fighting. I am absolutely not guilty of the charges that were brought upon me. There was no criminal intent here. Nothing was hidden. There were no shredded documents.
Nobody was told not to say anything uh 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 he'd 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 uh i just don't think we put enough infrastructure. in place to support some of that growth. Yeah, but some of the lines got blurred. Some of the lines between what was your money, what was Tyco's money became very fuzzy. I think I did everything accordingly to the way the programs were outlined and the way it was done by my predecessors.
Was there a situation where the rules got lost? More or less, as I said, we're in appeal on this and there's also civil litigation, so everything was done in a way that was appropriate. 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.
Even so, Kozlowski believes he was a dead duck from the start. I was a guy sitting in a courtroom who made $100 million. dollars a year and i think a juror sitting there just would have to say all that money he must have done something wrong i i think it's just you know it's as simple as that kozlowski says he was done in by bad timing the enron and world comp catastrophes he feels that most people believe that's what happened to taiko that employees were left high and dry but taiko remains a thriving 60 billion dollar company the company went on after i left there the company is a live thing It's doing well.
Does it make you angry to be lumped in with guys like Bernie Evers and Ken Lay? That just frustrated me to no end. These are companies that had financial and accounting schemes that had major scams. That wasn't Tyco.
This was a major paid dispute. But the jury didn't see it that way. He was sentenced to 8 to 25 years in order to pay restitution and fines of almost $200 million. It's unclear if he'll have any money left.
when he's 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 that's correct and they wanted to share in that that was probably 90% of the people in my life and they didn't give a damn about Dennis Kozlowski the man that's a that's a hard thing to write to reconcile yourself to but it did happen and it was not just his friends who left him how about count oh we're divorcing and uh you know that's we're moving on uh so but was his marriage like so many things in his life all about money well we were 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 years old now and 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 night so you kind of wake up every hour wishing and praying and hoping it was just a dream no but it's not it's reality and where you are oftentimes guys get religion inside that happened with you there's a spiritual side that you know I think about and then we reflect on from time to time but that's personal and private it you know within me yeah and you've got the time to do it i have plenty of time yes that i have