Taking Down the Lion: The Rise and Fall of Tyco's Dennis Kozlowski by Catherine S. Neal

were indicted, and with sensational details of wealth and extravagant spending reported in hundreds of media outlets, along with the official disclosures the Board opted to include in its September 2002 Form 8-K, civil actions by the dozens were filed by the Securities and Exchange Commission and by shareholders against Kozlowski, Swartz, Belnick, PricewaterhouseCoopers, the Directors, and Tyco International Ltd. David Boies and his law firm represented Tyco and the Board in actions filed against the company—the proliferation of lawsuits meant years of legal work for Boies, Schiller & Flexner.
    Criminal law expert Professor Christo Lassiter said, “With indictments like the ones in this case, the ripple effect is unbelievable and the magnitude of damage is incalculable. Prosecutors are given great power, and with that power comes great responsibility. A prosecutor must exercise good judgment and prudence. Sometimes, prosecution does more harm than good.” 33
    On behalf of Tyco, Boies, Schiller & Flexner filed an action against Kozlowski under the State of New York’s faithless servant doctrine. In the massive civil action, the company asked for damages that included all of the compensation Kozlowski earned from Tyco between 1997 and 2002, forfeiture and repayment of benefits, and other damages that amounted to about half a billion dollars. In addition to paying restitution of $100 million to Tyco, Kozlowski was stripped of his earnings by the company for which he worked for twenty-seven years.
    No Accounting Fraud
    In addition to representing Tyco in numerous civil actions, Boies, Schiller also conducted what was called “Phase 2” of the investigation at Tyco to which,according to David Boies’s biographer, the law firm assigned about twenty-five lawyers who collectively billed more than 15,000 hours. In addition, the law firm used more than 50,000 accountant hours in the second phase of the investigation. In the Boies biography v. Goliath, author Karen Donovan revealed the results of the investigation, which was said to find a “pattern of aggressive accounting.” However, the Boies report noted that “[a]ggressive accounting is not necessarily improper accounting.” The report also stated that in the instances of “questionable” accounting, there was no credible evidence of fraud, and the report concluded there was “no significant or systematic fraud affecting the Company’s prior financial statements.” The Boies report opined that “[f]ew, if any, major companies have ever been subjected to the corporate governance and accounting review entailed in Phase 2.” 34
    After all of the rumors, reports, questions, and allegations that the accounting methods and financial statements at Tyco were fraudulent, misleading, and that disclosures were improper, there was never any definitive finding of such—even after numerous reviews and investigations. It seems the results of the 1999–2000 SEC investigation were accurate. There were no problems with Tyco’s accounting. Yet more than a decade after the scandal began, reports, rumors, innuendo, and irresponsible journalism continued to inaccurately portray Tyco as one of the large corporate scandals that happened because of accounting fraud. It is simply not true.
    Writ of Habeas Corpus
    Having exhausted their appeals in the courts of the State of New York, Kozlowski and Swartz asked a federal court to throw out their convictions because they were denied access to potentially exculpatory evidence when the judge quashed the subpoena issued for notes taken by Boies, Schiller attorneys during interviews of Tyco Directors in the summer of 2002. Kozlowski and Swartz filed a petition for a writ of habeas corpus arguing that they were denied the right to present a defense—a right guaranteed by the U.S. Constitution.
    When the U.S. District Court for the Southern District of New York heard oral arguments in the habeas action in December of 2011, more than six years