-- Attorney General Anne Milgram announced
today that Tyco International Ltd. will
pay a total of $73.25 million as part of
a settlement agreement that resolves allegations
of securities fraud brought by the State
in a lawsuit against the company and several
of its executives and directors.
today, the agreement calls for payment of
the settlement funds by Tyco and certain
other defendants to New Jersey’s Division
of Investment, located within the Department
of Treasury. The settlement resolves allegations
brought in a 2002 civil suit that New Jersey’s
pension fund portfolio suffered significant
losses due to insider trading at Tyco, 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.
is an important settlement for the citizens
of New Jersey, and for the State’s
pension investment portfolio,” said
Attorney General Milgram. “Our duty
– and our commitment – is to
be aggressive in safeguarding the financial
interests of New Jersey residents, protecting
the State’s investments from fraud,
and holding corporations accountable.”
are gratified by the outcome of this securities
litigation,” said William Clark, Director
of the Division of Investment. “Upon
receipt, the net settlement proceeds will
be returned to the pension fund and other
Under terms of the agreement, there is no
admission of wrongdoing on the part of Tyco
International or any other settling party.
In addition to Tyco International, defendants
who are party to the settlement agreement
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.
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 both 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. Both
men are currently serving prison terms of
at least eight years and four months.
The Tyco settlement was handled on behalf
of the State by outside counsel including
the law firms of Riker Danzig and Shalov
Stone Bonner & Rocco. Senior Deputy
Attorney General Carol Jacobson of the Division
of Law acted as liaison with outside counsel
on the Tyco matter.
In resolving the State’s civil fraud
allegations against Tyco, the settlement
agreement announced today will result in
release of state Business Employment Incentive
Program (BEIP) grant funds to the company.
Tyco, which moved its U.S. headquarters
from Exeter, N.H. to Princeton, N.J., in
2003, was approved for BEIP grant funds
administered by the state Economic Development
Authority in June 2003. However, the approval
contained a stipulation that no funds would
be issued until the State’s pending
lawsuit was resolved. An estimated total
of $11 million in BEIP grant funds (spanning
the years 2003 through 2007) are due Tyco
under the BEIP program, although the exact
amount remains to be determined through
a thorough review and audit process.