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Ex-Tyco CEO To Be Charged With Sales Tax Evasion
2002-06-04
NEW YORK - Dennis Kozlowski, the dealmaking titan who built Tyco International Ltd. into a massive conglomerate before suddenly resigning, is being charged with sales tax violations, the Manhattan district attorney's office said Tuesday.Prosecutor Robert Morgenthau was to announce the charges at a midday news conference, according to spokeswoman Sherry Hunter, who would not provide further details. Kozlowski resigned Monday amid reports of the investigation into possible sales tax evasion involving millions of dollars in artwork. Although the investigation appeared to focus on how Kozlowski managed his vast personal fortune analysts said it raised serious concerns about his oversight of Tyco and its finances. ''He's someone that pushed the envelope, and this is something that could lead to further questions of the company,'' said Steven Altman, an analyst with Commerzbank in New York. The company, whose products range from undersea fiber-optic cable to coat hangers, already was beset in recent months by a Securities and Exchange Commission investigation, Enron-inspired accounting questions and a sinking stock price. Investors sent its shares down nearly 27 percent Monday in extremely heavy trading. In all, Tyco stock was down 73 percent since Jan. 1. Kozlowski and his lawyer did not return calls seeking comment Monday. No one answered the door at Kozlowski's palatial seaside home in North Hampton, N.H. Prosecutors are looking particularly at art purchases, a source familiar with the investigation told The Associated Press. At least $10 million in purchases are in question, according to the source, who spoke on condition of anonymity. Kozlowski has been under criminal investigation since January, the source said, and a grand jury began issuing subpoenas and taking testimony in recent weeks. No criminal charges have been filed. Tyco executive vice president Brad McGee said the probe ''is an investigation of Dennis as an individual, not as CEO of Tyco.'' Company officials are not aware of any Tyco employees under investigation, McGee said. The resignation of Kozlowski - a motorcyclist, sailing enthusiast and avid tennis player who split his time between the company's offices in New Hampshire and in Boca Raton, Fla. - came as the company has struggled for months. Critics say Tyco used accounting tricks when it bought companies to make its profits appear to grow faster than they actually did. AP
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