Tyco: Intent to Steal

[catbirdseat]

I learn something every day. Today I learned that under the law you must show intent to steal before you can convict someone of larceny or embezzlement.

 

EMBEZZLEMENT

 

According to the faculty of Northwest Wesleyan University ( source ):

 

"Embezzlement is the conversion of lawfully acquired property into something for unlawful purposes (personal use or profit). The property converted must have come into the suspect's possession via a position of trust, commonly called a fiduciary relationship. For example, employees, parking lot attendants, dry cleaning services, auto shops, and bankers typically occupy such positions of trust. The actus reus elements of embezzlement are the same as larceny except that the element of taking is relaxed and the element of breach of trust is added. All that's necessary to prove breach of trust is that the property was handled in a manner inconsistent with the trust arrangement.

 

Embezzlement is a specific intent crime. The requisite mental state is an intent to defraud and convert property. This mental state is sometimes proven by considering what happened after the act of larceny. If the person claims they intended to return the exact same property, it is false pretenses. If the person intended to return similar or identical property because they have already spent the profit, or covered up the losses in some way because of the physical impossibility of returning the original property, it is embezzlement."

 

In an article in today's New York Times the lone hold out juror in the Tyco corruption case stated that had the judge not declared a mistrial, there would have been a hung jury, regardless, because she herself did not believe that the prosecution had shown intent on the part of the defendants to steal from their company.

 

I'm sorry, but I can't share her point of view, let alone even understand it. These people were using the company as their personal piggy bank a la Bart Simpson with a hammer. They obviously had no intent to pay back the 600 million dollars they "borrowed".

 

This woman received a law degree at age 50. I would say one of two things is true: 1) She was bought off, or 2) America's law schools have sunk to a new low of moral relativism.

 

So let me get this straight. I can steal from my company as long as I "feel good" about it? I don't think I personally could get away with that.

[willstrickland]

The real irony in the Tyco debacle is that Kozlowski was the Wall St darling before all this shizzle for decrying the practices of CEOs who misused and abused corporate funds. Here's an excerpt off the wire from yesterday:

 

By Phyllis Plitch

Of DOW JONES NEWSWIRES

 

NEW YORK (Dow Jones)-- L. Dennis Kozlowski is shocked, shocked.

 

Or, at least he was. Especially when it came to the playboy reputation pinned on chief executives a decade ago.

 

In the fall of 1995, Kozlowski - whose $6,000 shower curtain, $15,000 umbrella stand and affairs with two female subordinates have become part of business lore - wrote that he was rankled by the "irresponsible image" of CEOs acting like "free-wheeling jet setters," and "playboys reliving our adolescent years."

 

"Most of us made it to the chief executive position because of a particularly high degree of responsibility and commitment to our jobs throughout our careers," Kozlowski wrote in Directors & Boards magazine, seeking to counter the negative perception of CEOs. "Too often we put the job first, sacrificing family and personal interests."

 

Excerpts from Kozlowski's mid-1990s article were posted Monday on the quarterly journal's Web site, in the wake of a mistrial in the case against the former Tyco International Ltd. (TYC) chairman and CEO, and former CFO, Mark H. Swartz.

 

As Kozlowski noted, it was penned at a time "of scandal and strife," following a string of CEO ousters in the early 1990s.

 

It was also written well before prosecutors accused Kozlowski of lavish spending on the company's tab, as part of a scheme to loot company coffers of $600 million. One of the most infamous allegations against Kozlowski related to billing the company for half of a $2 million party for his wife, held on the Italian island of Sardinia. A videotape of the party - which featured models in scantily-clad ancient Roman garb - was shown to jurors and has since become synonymous with corporate extravagance.

 

Despite the airing of such allegations, a state supreme court judge was forced to declare a mistrial on Friday because of pressure from "outside sources" on the jury following intense media coverage of the case. Several jurors later said they were on the verge of a verdict that would have found the pair guilty on some counts.

 

But back in 1995, Kozlowski offered himself up as a paragon of exemplary governance as he described an idealized version of how companies, boards and shareholders ought to interact.

 

"Accountability in corporate governance is here to stay. Accountability leads to outside directors who are active and informed, frequent communication with shareholders, and compensation tied to performance," he wrote. "Managements and directors of all public companies are being held to a higher standard. I'm convinced it works -- for shareholders and for those of us who manage a company's operations."

 

Though the trial ended without a verdict, Kozlowski's self-portrait contrasts sharply with the image drawn by prosecutors over the last six months. Indeed, in a passage that might make government enforcers wince, Kozlowski writes that CEOs are most offended "by the perception that we would waste the resources of a company that is a major part of our life and livelihood, and that we would be happy with directors who would permit that waste."

 

A lawyer for Kozlowski declined comment on the article.

 

"For a time he was a poster child for good governance, and a lot of us were sucked in," said 20-year veteran Directors & Boards' editor Jim Kristie.

 

Kristie said he posted the article after the mistrial - with its "massive ironies" as a kind of cautionary note. It's so rare that CEOs so vocally carry the banner of good corporate governance, he said, that when Kozlowski sang that tune, everyone was at his feet, throwing accolades at Tyco and its high-profile boss.

 

"It's just an example of how we look for a CEO who wants to take a front and center position on governance and when one does we gravitate to that," he said.

 

In the article, Kozlowski also took umbrage at the idea that CEOs seek out weak yes-men and yes-women for their boardroom. "Like teenagers, we supposedly resent being told what to do, so we ensure our boards of directors are populated by our buddies or by compliant grandfatherly types," he wrote.

 

In actuality, Kozlowski continued, driven CEOs "looked forward to being graded ever since the monthly elementary school report card; we welcome directors with the backbone to judge our performance against tough standards."

 

-Phyllis Plitch; Dow Jones Newswires; 201-938-2357; phyllis.plitch@dowjones.com

[catbirdseat]

I say give 'em the needle.