Ex-Tyco Lawyer Belnick Pleads Innocent
NEW YORK (AP) _ Rather than blow the whistle on crime, the former chief lawyer for Tyco International joined other top executives in a giant fraud, accepting a $12 million ``special bonus″ to help thwart one federal probe, a prosecutor said Monday as he brought new charges.
``This is a case where the system of checks and balances broke down,″ Manhattan District Attorney Robert Morgenthau said, unveiling an indictment charging Mark Belnick, 56, with first-degree grand larceny, falsifying business records and scheming to defraud.
Belnick was supposed to advise the company on what was legal; instead, Morgenthau said, ``the watchdog is in the chicken coop chasing the chickens.″
In a brief court appearance, Belnick pleaded innocent to the charges, the most serious of which carried a maximum prison term of 25 years.
``We are disappointed and somewhat puzzled by these charges,″ said Belnick’s lawyer, Reid Weingarten. He said he was confident his client will prevail against prosecutors who apparently ``don’t approve of an executive who gets a bonus for good work.″
Morgenthau said the $12 million bonus was paid to Belnick in several installments in 2000 for his role in persuading the Securities and Exchange Commission to end an earlier investigation into accounting problems at Tyco. The bonus included $2 million in cash and 200,000 shares of Tyco stock, according to the indictment.
Belnick was also accused of failing to publicly disclose a payment of $2.5 million to a company director, whom Morgenthau identified as Lord Michael Ashcroft. Morgenthau said the payment related to Tyco’s purchase of a home in Boca Raton, Fla., that was owned by Ashcroft’s family.
Ashcroft _ a board director for 18 years who sold his security systems company, ADT, to Tyco _ resigned last November in a move to restore investor confidence in the diversified conglomerate. He was not charged in Monday’s indictment.
The fraud charge accuses Belnick of making false representations about Tyco’s financial condition. In particular, the indictment alleges, Belnick failed to disclose that he had obtained $14.5 million in interest-free loans from Tyco; that he had received special bonuses; and that he had obtained more than $25 million by selling Tyco stock.
After entering Manhattan Supreme Court in handcuffs, Belnick was released under the terms of an existing $1 million bail package.
Belnick, who lives in Manhattan and has a second home in Park City, Utah, was already facing charges that he falsified paperwork to receive $14 million from the company. Weingarten has said the loan was taken with the full knowledge of the Tyco board of directors’ compensation committee.
Liz Mather, a spokeswoman for Tyco, said Monday the company had no specific comment on the new charges, but said the company was cooperating with prosecutors.
Along with Belnick, a Manhattan grand jury last year also indicted Tyco former chief executive officer Dennis Kozlowski and former chief financial officer Mark Swartz on charges of stealing some $600 million from the company. Kozlowski has also been charged with evading more than $1 million in New York State sales taxes.
The defendants have pleaded innocent and are free on bail.
Based in Bermuda but with U.S. headquarters in Exeter, N.H., Tyco makes everything from telecommunications equipment to home alarm systems.