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TRENTON
-- Attorney General Anne Milgram announced
today that the financial services firm PricewaterhouseCoopers
LLP ands its Bermuda affiliate have paid the
state a total of $5.85 million to resolve
allegations of alleged fraud and accounting
improprieties at Tyco International Ltd.
Tyco
International paid the state a total of $73.25
million last year to settle allegations of
insider trading, accounting improprieties
and other fraud that resulted in significant
losses for New Jersey’s pension fund
portfolio. Some Tyco executives went to prison
as a result of the fraud, and they remain
defendants in this civil litigation.
“This
is another important settlement for the citizens
of New Jersey, and for the state’s pension
investment portfolio,” said Attorney
General Milgram. “We remain firm in
our commitment to safeguard the state’s
financial assets, to protect investors from
fraud, and to hold corporations accountable.”
”We
are gratified by the outcome of this securities
litigation,” said State Treasurer David
Rousseau. ”The net settlement proceeds
will be returned to the pension fund and other
portfolios managed by the Division of Investment.”
The settlement payout announced today resolves
allegations brought by the state against PricewaterhouseCoopers
LLP in a 2002 civil lawsuit that also named
Tyco International and various individual
Tyco officers and directors. The suit charged
that New Jersey’s pension fund portfolio
had suffered substantial losses due not only
to accounting improprieties, but executives
using corporate funds for personal expenses,
failure on the part of executives to disclose
millions of dollars in personal loan benefits
received from the company and other fraud.
Former Tyco CEO L. Dennis Kozlowski and former
Tyco Chief Financial Officer Mark H. Swartz
were both convicted in New York 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. Both
men are currently serving prison terms.
New
Jersey’s 2002 civil suit alleged that
PricewaterhouseCoopers LLP and its Bermuda
affiliate, PricewaterhouseCoopers, contributed
to losses incurred by the state’s pension
fund portfolio by violating Generally Accepted
Accounting Principles and Generally Accepted
Auditing Standards in handling Tyco International’s
books.
Under terms of the settlement agreement, there
is no admission of wrongdoing on the part
of PricewaterhouseCoopers LLP or PricewaterhouseCoopers.
The state’s settlement with Tyco International
Ltd. was announced in April 2008. In addition
to the Tyco corporation, several individual
Tyco executives were party to that agreement
including: 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 state’s lawsuit against former Tyco
executives Kozlowski and Swartz, as well as
former Tyco director Frank E. Walsh, Jr.,
remains pending.
The
PricewaterhouseCoopers LLP settlement was
handled on behalf of the state by outside
counsel including the law firms of Riker,
Danzig, Scherer, Hyland & Perretti and
Shalov Stone Bonner & Rocco. Senior Deputy
Attorney General Carol G. Jacobson of the
Division of Law acted as liaison with outside
counsel on the matter.
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