Ex-Tyco Official Tells of Money Requests
NEW YORK (Dow Jones/AP) _ A former Tyco International Ltd. administrator who once dated her boss, L. Dennis Kozlowski, testified that she routinely handled his requests for company money for personal items, from beach house renovations to an $8.3 million stake in the New Jersey Nets.
Mary Murphy, who left her $150,000-a-year job at Tyco last year, was shown on an overhead screen numerous requests for checks and wire transfers that she made in 1997 and 1998, a period that overlapped her relationship with Kozlowski, Tyco’s former chief executive.
Murphy also said she received a lucrative severance package when she left Tyco in April 1999, shortly after the two ended their yearlong romance.
Kozlowski and Mark H. Swartz, Tyco’s former financial chief, are on trial for allegedly looting the conglomerate of $600 million.
Assistant District Attorney Gerald Murphy _ who has the same last name but is no relation _ asked her during Thursday’s session about a 1997 wire transfer of $5,000 to Kozlowski’s daughter, Cheryl.
``It says requested by me, but it would be requested by Dennis,″ Mary Murphy replied.
She gave similar responses as the prosecutor asked her about a $200,000 wire transfer for renovations to a Greenwich, Conn., home occupied by Kozlowski’s ex-wife, Angie; a $50,000 check request for work done to his Rye, N.H., beach house; an $11,000 request to a boat company for expenses such as installation of drink holders in a boat’s cockpit; and an $8.3 million request for Kozlowski’s investment in the Nets basketball team.
Most of the money Murphy requested was charged to Kozlowski’s Key Employee Loan account at Tyco, according to documents introduced into evidence. Prosecutors have said the loan program was set up to help employees pay taxes on stock grants but that executives abused it to buy luxury items.
The potentially damaging statements came after several days of drier testimony by a Tyco accountant, and appeared to hold jurors’ attention.
Some of Murphy’s remarks appeared similar to those of Barbara Jacques, a former Tyco marketing manager who testified earlier in the trial that she had an intimate relationship with Kozlowski in the late 1980s and lived cost-free in several Tyco apartments, among other perks.
Murphy was asked by the prosecutor about a change in her relationship with Kozlowski in 1998.
``We dated,″ she said, describing how the relationship lasted on and off for about a year until roughly April 1999, when she decided to leave the company for ``personal issues.″
Murphy, who has since married, said she worked at Tyco’s New York and New Hampshire offices, and that she lived cost-free at a Manhattan apartment on Columbus Avenue, where Tyco picked up the monthly rent of $4,500 and bought the place outright in 1996.
Murphy, who appeared nervous when she first took the stand, appeared to choke up slightly as she talked about searching for a place to live in Manhattan. Her parents were concerned about her safety, she said.
Kozlowski ``made sure I was in a safe building and safe area,″ she said.
Later, in testimony strikingly similar to that of Jacques’, Murphy told how Kozlowski and Swartz at about that time paid a visit to her, telling her that she would be entitled to any gain from the sale of the apartment.
Murphy testified that Tyco also gave her an interest-free loan to buy a $285,000 condominium in New Hampshire, and a $500,000 condo in Highland Beach, Fla., near Tyco’s Boca Raton branch. She said she eventually sold the New Hampshire condo and returned the money to Tyco, but used another company loan to buy a $299,000 home in Newburyport, Mass.
``I was never told of any interest on any loans,″ she said. When the prosecutor asked if she had ever made a payment, she replied ``No.″
Murphy said she left Tyco in April 1999 after receiving a parachute letter, which entitled her to four years of her $90,000 base salary; the transfer of a company Ford Explorer sports utility vehicle to her name; and the forgiveness of the loan on her Newburyport home. The agreement also gave her the choice of returning her Tyco stock options for $500,000, which she decided against.
Murphy eventually returned to Tyco in October 2001, when Kozlowski offered her $150,000 a year to assist him. ``He and I worked very, very well together,″ she said.
During cross-examination, Kozlowski lawyer Austin Campriello sought to show that Murphy was amply rewarded for her hard work at the company _ not because she had been involved with Kozlowski.
He asked her about her social activities when she worked at Tyco in the late 1990s, during the company’s acquisition spree. ``I had no life,″ Murphy testified. ``Nobody there had a life.″
Campriello pointed out the wire transfers and check requests made by Murphy on Kozlowski’s behalf always stated the reason why the money was needed _ such as ``Greenwich, Conn., house - renovations.″ The defense has repeatedly sought to show the executives’ actions were in the open and didn’t constitute looting.
``Dennis never said, `Put the reason on after it was approved?‴ Campriello asked. ``No,″ Murphy replied.