Mark Belnick, former executive vice president and chief corporate counsel of Tyco International Ltd., was found not guilty on Thursday of securities fraud, grand larceny, and falsifying business records.
The verdict came on the fifth day of deliberations — even as the prosecution and the defense were discussing a plea, according to the Associated Press — after a two-month trial in the Manhattan courtroom of State Supreme Court Judge Michael Obus.
Belnick was originally indicted in September 2002 with Tyco’s former CEO Dennis Kozlowski and former CFO Mark Swartz. According to charges filed by Manhattan District Attorney Robert Morgenthau, Belnick hid $14 million in undisclosed, interest-free relocation loans to himself. Added Stephen Cutler, director of enforcement of the Securities and Exchange Commission, in a statement, “Kozlowski, Swartz, and Belnick treated Tyco as their private bank.”
In February, prosecutors added three criminal charges against the 56-year-old, including a felony larceny charge stemming from a $17 million bonus he allegedly received in the form of $2 million in cash and 200,000 Tyco shares. Belnick also was accused of failing to disclose a $2.5 million related-party transaction that resulted in a payment to a Tyco director, identified as Lord Michael Ashcroft. Ashcroft resigned from Tyco’s board last year, according to Morgenthau.
In charging Belnick with grand larceny, reported Reuters, prosecutors had alleged that Belnick received the $17 million bonus from Kozlowski for helping the former CEO cover up suspicious payments to his girlfriend. Belnick reportedly testified that he received the payment for resolving a Securities and Exchange Commission investigation of the company.
“Every dollar I received at Tyco I earned,” Belnick reportedly said during his testimony. “Every dollar I received was authorized.”
The prosecution had maintained that Belnick, Tyco’s top legal officer, should have known that only the board of directors could approve such a payment, according to the Associated Press. Belnick reportedly testified that when Kozlowski hired him, Kozlowski said he had the authority to set Belnick’s compensation. Judge Obus had instructed jurors that they could consider whether Belnick had a good faith, reasonable belief that the bonus offered by Kozlowski was authorized.
Belnick’s trial was held in the same courtroom where, in April, Judge Obus declared a mistrial in the case of Kozlowski and Swartz. That case is expected to be retried in January.