Tyco Settles Fraud Case with Garden State for $73M

May 2, 2008 (PLANSPONSOR.com) - Tyco International has agreed to a $73.25 million settlement of a securities fraud case by the state of New Jersey against the company and several of its executives and directors, state officials announced.

A news release from Attorney General Anne Milgram said the deal resolves allegations brought in a 2002 civil suit that New Jersey’s pension fund portfolio suffered significant losses because of its Tyco holdings (See  Garden State Fights Back With Pension Loss Lawsuits ). The company was charged with insider trading,   failure on the part of Tyco executives to disclose millions of dollars in personal loan benefits received from the company, accounting improprieties, and other fraud.

In addition to Tyco International, defendants include former Tyco General Counsel Mark A. Belnick and Tyco directors Richard S. Bodman, John F. Fort III, James S. Pasman, Jr., and Wendy E. Lane. The defendants did not admit wrongdoing.

Milgram said in the news release that the state’s original lawsuit remains pending against former Tyco CEO L. Dennis Kozlowski, former Tyco Chief Financial Officer Mark H. Swartz, former Tyco director Frank E. Walsh, Jr., the accounting firm PricewaterhouseCoopers LLP, and its Bermuda affiliate, PricewaterhouseCoopers .

Kozlowski and Swartz were convicted in New York in 2005 on criminal charges for supporting lavish lifestyles by giving themselves unauthorized corporate bonuses, abusing loan programs, and selling Tyco company stock at inflated prices after misleading investors about Tyco’s finances, the announcement said. Both men are currently serving prison terms of at least eight years and four months.