Ex-Tyco CEO Kozlowski appeals to top New York court

By Martha Graybow

NEW YORK (Reuters) - Lawyers for imprisoned former Tyco International Ltd Chief Executive Dennis Kozlowski and ex-financial chief Mark Swartz on Tuesday asked New York's highest court to throw out their convictions, saying a jury had insufficient evidence when it found them guilty.

Both Kozlowski, once one of the most powerful U.S. chief executives, and Swartz were found guilty in June 2005 of stealing more than $150 million from the conglomerate.

They have each served nearly three years of their prison terms, which were set at 8-1/3 to 25 years apiece.

The case became synonymous with corporate excess after prosecutors said Kozlowski, 61, had used Tyco money for lavish parties and furnishings for his Manhattan apartment, including a $6,000 shower curtain and a $15,000 umbrella stand. The convictions came after an earlier mistrial.

Lawyers for the two men argued to the New York State Court of Appeals in Albany that the trials were flawed for several reasons and the convictions should be reversed.

Kozlowski's attorney, John Martin, said a key prosecution witness unfairly prejudiced the jury. He said the trial court erred in allowing the testimony of David Boies, a lawyer hired by Tyco in 2002 to conduct an internal probe.

Martin said Boies became the prosecution's central witness but "should never have been allowed to testify about this investigation." Kozlowski has argued that Boies's testimony about a conversation he said he had with Swartz after Kozlowski left Tyco should have been inadmissible.

A lawyer for Swartz, Nathaniel Marmur, said that his client's defense was badly hurt by the lower court's decision not to allow a subpoena for notes of interviews with Tyco board members that were part of the internal investigation. Those board members later testified for the prosecution at trial.

Marmur said that the evidence from the internal probe was only used to help one side in the case, and that the directors had held a positive view of Swartz before his indictment.

"The key issue for us at trial came down to whether these directors were telling the truth," Marmur said.

Amyjane Rettew, an assistant district attorney in Manhattan, argued to the appeals court that the convictions should stand.

The hearing was monitored by Reuters via a webcast.

Kozlowski and Swartz were each found guilty of 22 counts of grand larceny, conspiracy, fraud and falsifying business records.

In November, the appeals division of the State Supreme Court upheld the convictions and declined to reduce the two men's prison sentences. Also upheld was the trial court's order of restitution of $134.35 million from both men and $70 million in fines for Kozlowski and $35 million for Swartz.

The men then appealed to the Court of Appeals. The court did not indicate on Tuesday when it would rule.

(Reporting by Martha Graybow; editing by Carol Bishopric)

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