Tyco CEO Dennis Kozlowski CBS 60 Minutes Prison Interview

Summary

The script follows the downfall of Dennis Koslowski, former CEO of Tyco, convicted of looting millions from the company. Once a powerful executive with lavish lifestyles, including a $2 million party and a $6,000 shower curtain, Koslowski now serves 8 to 25 years in prison. He reflects on his rise from humble beginnings, the excesses that led to his conviction, and the emotional toll of losing wealth, power, and personal relationships. Despite maintaining his innocence, Koslowski faces the harsh reality of prison life, focusing on his appeal and introspection.

Takeaways

• 📉 The video discusses corporate scandals, with a focus on Dennis Koslowski, former CEO of Tyco, who was convicted of grand larceny, conspiracy, and securities fraud.
• 👨‍⚖️ Koslowski was sentenced to 8 to 25 years in prison for using Tyco's resources as his personal piggy bank, notably spending over a million dollars on personal luxury items.
• 💸 Notorious examples of his excesses include a $6,000 shower curtain and a $2 million birthday party, symbolizing the extravagant misuse of company funds.
• 🛫 Koslowski's former lavish lifestyle included private jets, luxury mansions, and expensive art collections, including works by Renoir and Monet.
• 👨‍👩‍👦‍👦 The video touches on how Koslowski came from humble beginnings, working his way up to the CEO position of Tyco, turning the company into a $40 billion conglomerate.
• 💼 While Koslowski maintains his innocence, the jury found him guilty, and he believes his wealth and timing with other corporate scandals like Enron influenced their decision.
• 🕵️‍♂️ The scandal intensified when it was revealed Koslowski had evaded sales tax on expensive art purchases and had unauthorized bonuses and interest-free loans.
• 📉 Koslowski expresses frustration being compared to figures like Bernie Madoff, insisting Tyco's downfall was not a result of a financial scam but a payment dispute.
• 👥 Koslowski admits that many of the people in his life were only there for his money and power, reflecting on how most of his friends abandoned him after his conviction.
• ⏳ Now in prison, Koslowski earns $1 a day doing menial tasks and is focusing on his appeal, while also coping with personal losses, including his wife divorcing him.

Q & A

What major corporate scandal is discussed in the transcript?

The transcript discusses the scandal involving Dennis Koslowski, the former CEO of Tyco International, who was found guilty of misusing the company's financial resources for personal gain.

What were some of the luxury items Dennis Koslowski purchased with Tyco's funds?

Dennis Koslowski purchased a $6,000 shower curtain, a $15,000 doggy umbrella stand, a $2 million birthday party for his wife, and a $19 million apartment decorated with $1 million worth of items.

How did Dennis Koslowski rise to the position of CEO at Tyco?

Dennis Koslowski started at Tyco as an accountant in a small New Hampshire manufacturing company, earning $28,000 a year. He worked his way up, becoming known as 'Deal a Day Dennis' for his aggressive acquisition strategy, ultimately transforming Tyco into a $40 billion conglomerate.

What led to Dennis Koslowski's downfall and subsequent conviction?

Koslowski was convicted of 22 counts of grand larceny, conspiracy, and securities fraud. He was accused of using Tyco's resources for personal expenses, granting himself unauthorized bonuses, and evading over a million dollars in sales tax on art purchases.

What was the public reaction to the luxury items purchased by Dennis Koslowski?

The public and media reacted with outrage and ridicule, particularly highlighting items like the $6,000 shower curtain and the extravagant birthday party for his wife. These details became tabloid headlines, mocking his taste and greed.

How does Dennis Koslowski view his own actions and the jury's verdict?

Dennis Koslowski maintains that he is not guilty and believes there was no criminal intent in his actions. He argues that everything he did was authorized and that the jury misunderstood his case due to the timing of the Enron and WorldCom scandals.

How did the Tyco board contribute to the situation, according to Koslowski?

Koslowski suggests that the Tyco board gave him almost unlimited authority, and the lack of proper oversight contributed to the blurred lines between his personal and company expenses. He believes this was a major factor in the case against him.

What impact did the scandal have on Dennis Koslowski's personal life?

The scandal led to the end of many of his personal relationships, including his marriage. He admits that most of the people in his life were there for his wealth and power, not for who he was as a person.

What was Dennis Koslowski's response to Donald Trump's criticism of his behavior?

When Donald Trump criticized his behavior as 'tacky,' Koslowski dismissed it, remarking, 'from Donald Trump… he would know.' This response indicates his disdain for Trump's comment, highlighting the irony in the criticism.

How does Dennis Koslowski spend his time in prison, and what are his reflections?

Koslowski spends his time in prison focused on his appeal, earning a dollar a day mopping floors, and reflecting on his life. He acknowledges the harsh reality of his situation, often wishing it was just a dream, and mentions that he has time to reflect on his spiritual side.

Outlines

00:00

💼 Corporate Scandals and Dennis Koslowski's Fall from Grace

This paragraph opens by referencing a wave of corporate scandals, highlighting cases such as Enron and Dennis Koslowski, the CEO of Tyco. Koslowski was convicted of using Tyco's funds for personal luxuries, such as a $6,000 shower curtain, and stealing over $100 million. Once a powerful CEO, Koslowski is now serving an 8 to 25-year sentence in prison, reflecting on his dramatic fall from a life of extreme wealth and privilege to that of a prisoner.

05:02

🔗 Life in Prison and Reflecting on Mortality

In this section, Koslowski speaks from Midstate Correctional Facility, where he now lives among murderers and drug dealers. Earning just a dollar a day for menial tasks, Koslowski reflects on how he never imagined this future. After a heart ailment, he decided to speak publicly, driven by a newfound awareness of his mortality. Though unable to discuss details due to an appeal, he maintains that the jury made a mistake, convicting him on 22 counts related to grand larceny, conspiracy, and securities fraud.

10:03

📉 The Downfall of a Powerful CEO

Koslowski is portrayed as the embodiment of corporate greed, compared to the fictional character Gordon Gekko from 'Wall Street.' Born in Newark, New Jersey, he worked multiple jobs before joining Tyco as an accountant. Through his aggressive acquisition strategy, he transformed Tyco from a $40 million company into a $40 billion conglomerate. His earnings became astronomical, and wealth served as a 'way of keeping score.' This vast fortune allowed him to indulge in luxury, owning homes across the country and purchasing expensive art.

🎨 Art, Luxury, and Tax Evasion

Koslowski's lavish spending included $13 million in art, but this led to accusations of tax evasion when he shipped the artwork to Tyco’s tax-free office in New Hampshire before transporting it back to New York. His resignation as CEO in 2002 was followed by a damning report from Tyco’s board. His excessive spending—such as a $15,000 doggy umbrella stand—became tabloid fodder. The $6,000 shower curtain became the symbol of his greed. Koslowski claims minimal involvement in the apartment’s decoration, but the media and public saw it as emblematic of his downfall.

🎉 A Lavish Birthday Party and Corporate Misconduct

One of the most infamous events associated with Koslowski was his wife’s $2 million birthday party in Sardinia, featuring togas, Jimmy Buffett, and extravagant decorations. Koslowski justified the expense as partially work-related, leading Tyco to cover half the cost. Despite the over-the-top spectacle, Koslowski was more embarrassed than anything, especially when it was publicly criticized by Donald Trump. But beyond these 'tacky' displays, Koslowski faced far more serious charges of corporate theft, accused of pocketing millions through unauthorized bonuses and stock sales.

⚖️ Theft and the Legal Battle

Koslowski and his second-in-command were charged with stealing $170 million and misrepresenting Tyco’s finances. Koslowski claims he acted within the company's policies and that the board was aware of his actions. He insists there was no intent to commit fraud, pointing to the company’s records as proof. Though he testified in court that his loans were legitimate and repaid, the jury disagreed. Koslowski argues that he was a victim of circumstances, swept up in the post-Enron era when corporate leaders were easy targets for prosecution.

🏦 Blurred Lines Between Corporate and Personal Wealth

Koslowski admits that the lines between his personal wealth and Tyco’s assets may have blurred, but he insists that he followed the same procedures as his predecessors. However, with the head of compensation, who could corroborate his version of events, no longer alive, he faces an uphill legal battle. Koslowski believes his vast wealth made him an easy target for the jury, who were unable to separate him from other high-profile cases like Enron. Despite his conviction, Tyco continued to thrive as a successful company.

🤔 Reflecting on Wealth, Power, and Loss

Koslowski feels unfairly grouped with infamous fraudsters like Bernie Ebbers and Ken Lay, pointing out that Tyco’s success continues. He is frustrated that the public perception of Tyco’s failure due to his actions is incorrect. While Tyco remains strong, Koslowski's personal fortunes have collapsed. He has been ordered to pay nearly $200 million in fines and restitution, and it is uncertain whether he will have any money left upon his release. In prison, Koslowski is isolated, with most of his former friends abandoning him. His marriage is also ending in divorce.

⏳ A New Life Behind Bars and Spiritual Reflection

Koslowski is resigned to his fate, reflecting on his isolation and the harsh realities of prison life, where he frequently wakes up in the middle of the night under the constant light. Though he tries to stay positive, he is acutely aware of the vast changes in his life. He acknowledges that prison has provided time for spiritual contemplation, though he keeps these reflections private. With few friends left, he spends his time focused on his appeal and adjusting to a drastically different life.

Keywords

💡Corporate Scandal

Corporate scandals refer to major ethical, financial, or legal breaches committed by corporations or their executives. In the video, scandals such as those involving Enron and Dennis Koslowski are central, highlighting issues of fraud, embezzlement, and mismanagement. Koslowski's actions at Tyco International, which included misappropriating company funds for personal use, embody this theme.

💡Tyco International

Tyco International was the company where Dennis Koslowski served as CEO. It is central to the narrative because Koslowski is accused of misusing the company’s financial resources for personal gain. Tyco grew into a $40 billion conglomerate under his leadership, but his downfall came with allegations of unauthorized bonuses, evasion of sales taxes, and lavish spending at the company’s expense.

💡Grand Larceny

Grand larceny is the crime of theft involving a large amount of money or high-value property. Koslowski was convicted of grand larceny for stealing millions from Tyco. This term is key in understanding the legal consequences of his corporate actions and the gravity of his crimes, which involved siphoning funds and receiving unauthorized compensation.

💡White-Collar Crime

White-collar crime refers to financially motivated, non-violent crimes committed by business professionals. Koslowski’s case is an example of white-collar crime, which includes fraud, securities violations, and embezzlement. The video places his actions within the broader context of other high-profile white-collar crimes, such as Enron and WorldCom.

💡Judicial System

The judicial system refers to the courts and legal framework that handle criminal and civil cases. Koslowski mentions his belief in the system but argues that the jury got it wrong in his case. The judicial system’s role in prosecuting corporate crimes and his ongoing appeals play a significant part in his narrative.

💡Sales Tax Evasion

Sales tax evasion is the illegal practice of not paying taxes on sales of goods or services. Koslowski was indicted for evading over a million dollars in sales tax by shipping expensive artwork to Tyco offices in states with no sales tax. This tax evasion became one of the key legal issues in his downfall, highlighting his use of company funds for personal benefit.

💡Luxurious Spending

Luxurious spending refers to the excessive personal expenses that Koslowski incurred, using Tyco’s financial resources. Notable examples include a $6,000 shower curtain and a $2 million birthday party. His extravagant lifestyle became a symbol of corporate greed, drawing public attention to his misuse of company funds.

💡Board of Directors

A company's board of directors is responsible for overseeing management and protecting shareholders' interests. The Tyco board’s lack of oversight allowed Koslowski significant autonomy, which he exploited. This lack of checks and balances plays a central role in the narrative of corporate mismanagement and ethical failure.

💡Restitution

Restitution is the act of compensating for wrongdoing, often through financial payment. Koslowski was ordered to pay nearly $200 million in restitution and fines. This represents the financial consequences of his crimes and is a central part of his punishment for defrauding Tyco shareholders and employees.

💡Social Status

Social status refers to the standing or prestige an individual holds in society. Koslowski's rise to wealth and prominence is contrasted with his fall, where his social connections and power fade away. His luxurious lifestyle, including being on the board of the Whitney Museum, was tied to his wealth, and his conviction led to his loss of status and friendships.

Highlights

Dennis Koslowski, former CEO of Tyco, was found guilty of using the company's immense financial resources for personal use, including a $6,000 shower curtain and misappropriating millions of dollars.

Koslowski went from being a corporate titan who could charter private jets on a whim to prisoner number 05A482, serving an 8 to 25-year sentence.

In prison, Koslowski earns a dollar a day working jobs like mopping floors and serving food to inmates.

He reflects on his mortality after being hospitalized with a heart condition, which prompted him to speak publicly for the first time since his conviction.

Koslowski maintains that he believes in the judicial system but argues that the jury got his case wrong.

His conviction was part of a larger wave of corporate scandals, including Enron and WorldCom, which were making headlines at the time.

Koslowski started at Tyco as an accountant, earning $28,000 a year, and eventually turned the company into a $40 billion conglomerate through aggressive acquisitions.

He made over $100 million in a single year as part of Tyco's pay-for-performance culture, a testament to his financial success.

Koslowski's lavish spending, including $30 million for a mansion and $16 million for a vintage yacht, earned him a reputation for excess and greed.

A $2 million toga-themed birthday party for his wife, which included extravagant elements like an anatomically correct cake, became infamous and was partly billed as a corporate expense.

The prosecution accused Koslowski of stealing $170 million and pocketing an additional $430 million through the sale of company stock while lying about Tyco’s financial condition.

Koslowski claims that all his actions were authorized and transparent, with no criminal intent or hidden documents.

He believes his conviction was influenced by public outrage during a time when corporate greed was under intense scrutiny.

Tyco, despite the scandal, continued to thrive as a $60 billion company after Koslowski’s departure, further complicating the narrative around his downfall.

Most of Koslowski's friends abandoned him after his conviction, and his marriage also fell apart during his prison sentence.

At age 60, Koslowski reflects on his situation, admitting that many people in his life were only interested in his wealth and power.

Transcripts

a year ago or so the air was thick with

Tales of corporate Scandal lost Pension

funds big-time theft and even bigger

time prison sentences for the Enron gang

then there was Dennis Kowski CEO of Tao

who was found guilty of in effect using

Tao's immense Financial Resources for

what the prosecution described as his

own personal piggy bag you might

remember the $6,000 shower curtain and

stealing over aund million from the

company

well we wondered how the man who could

whistle up a corporate jet on a whim or

throw a $2 million birthday party was

doing in his reduced circumstances

what's it like to go from King of the

world to prisoner number 05

a482 serving 8 to 25 years behind bars

once again Dennis kazlowski

we caught up with Dennis Koslowski at

Midstate Correctional Facility in

Upstate New York how you doing I'm doing

okay guests include murderers drug

dealers and pedophiles and the odd

multi-millionaire in my wildest

imagination uh when I would project

myself into my late 50s and early 60s

where I would be or what I would be

doing if I make a list of a hundred

different places or 100 different things

here would never make that list he now

earns a dollar a day mopping floors and

slinging hash to his fellow inmates in

January Kowski spent a week in in

hospital with a heart ailment and got to

thinking you've not talked publicly up

till now why did you decide to do it

when I was in the hospital in January I

was outside the emergency room feeling

really uncomfortable frightened and

that's when I really made the firm

decision that I wanted to go through and

and and and talk to you at this time you

became aware of your own mortality very

much so and you didn't want to leave

this world without without at least an

opportunity to talk about my side of the

story to the said that I can talk about

it he agreed to speak with one

stipulation that we would not include

anyone else in this story because of an

appeal he'll not discuss the details of

his case but he will say I believe in

the judicial system I think all that

works but in this case the jury got it

wrong that jury convicted him of 22

counts of grand larsy conspiracy and

securities fraud his trials occurred in

the wake of a white colar crime wave

Enron world K and Martha

Stewart the newsound smelled blood

accused of looting his company of

hundreds of millions of dollars and

living the life of aasia at stockholders

expense he was the living breathing

version of wall Street's Gordon gecko

Greed for lack of a better word is good

up to a point what's puzzling is why

does a man who struggled so hard so

effectively to make it become so

careless or stupid or arrogant born in a

tenent on the wrong side of the tracks

in Newark New Jersey klosi worked his

way through school I played guitar in a

band I worked in a pharmacy I worked in

a car wash I had two or three jobs going

at any given time where you came from uh

there weren't that many options no no

growing up in north New Jersey at the

time you know you never thought of

yourself growing up to become a CEO he

started a tao then at a small New

Hampshire manufacturing company as an

accountant making $28,000 a year and

worked his way up to CEO he became known

as deal a day Dennis constantly

acquiring new companies and building Tao

from a $40 million company into a $40

billion conglomerate would like to

become all things equal $100 billion

company Wall Street could not get enough

of the young aggressive CEO he also

began making staggering amounts of money

among the top earning CEOs in the

country we had a pay for performance

culture at Tao so most of the money I

earned was in the appreciation of Tao

stock one year you made I think $170

million not sure 170 but I made over 100

million yeah well more money than 10

million here 10 million there who cares

but what's it like to earn that kind of

money it's a way of keeping score I

guess keeping score meant keeping up

with the Masters of the Universe $30

million to build a mansion in buar Raton

acquiring homes in Nantucket and

Colorado and just loose change $16

million for endeavor a vintage yard

wealth meant one thing social acceptance

another he and his second wife Karen

Mayo spent Millions on painting he

joined the board of the Whitney mum for

a p in New York he had Tao by a $19

million apartment and decorated it with

$1 million worth of stuff the poor kid

from Newark was stepping out on Fifth

Avenue would Dennis Kowski a few years

ago even contemplated going to Europe to

buy old Master paintings no absolutely

not you know it came with earning the

amount of money I was earning at the

time was it your idea or were you

invited to join the board of the Whit oh

I I it was not my idea at all I was

invited to join the board and I never

made a board meeting you were invited

because they like having really rich

guys on the board uh I assume it wasn't

for my knowledge of

art but it was art that would lead to

his undoing the Manhattan District

Attorney's office was investigating

galleries that were helping customers

avoid sales taxes kazlowski had

purchased $13 million worth of paintings

including a Renoir and money for the Tao

apartment but prosecutors said he had

some of them shipped to Tao's office in

New Hampshire a state without sales tax

they were then trucked back to New York

in 2002 the Manhattan District

Attorney's Office indicted Kowski for

evading over a million dollars in sales

tax and he resigned as CEO but that was

only the beginning The Tao board

investigated its CEO's behavior and made

public a report that was devastating

koslow's excesses were revealed in

excruciating detail decorations for the

New York apartment became classic

tabloid headlines mocking the CEO's

taste and his greed the $15,000 doggy

umbrella stand and the ultimate symbol

of his downfall that $6,000 shower

curtain the coverage was really

punishing that was horrible as overblown

as the coverage may have been you signed

off on those things I signed off on a

decorator here to uh decorate The Tao

apartment and beyond that that was my

involvement I the first time I heard

about that shower curtain the first time

was after I was out of the company and I

read about it in a newspaper and I it

was calling around asking where's the

shower Cur but to this day I wouldn't

know it if it fell on me

[Music]

so and then there was the 40th birthday

party for koslowski's wife Karen in

Sardinia

it was toga

Galore a 4-day festival of Flesh let's

rock Jimmy Buffett was flown in for the

music and guests were treated to a

special cake an anatomically correct

woman with exploding

breast the cost was over $2 million

since Kowski claimed it was in part A

work r

Tao footed half the bill was it

embarrassing for you though when they

played that tape kind of or going on

yeah horrible it was over the top look

at that I was taken back by it but I

smiled and worked my way through it

wanted the night end as fast as I could

Donald Trump called your behavior Tacky

Tacky Tacky from Donald Trump from

Donald Trump oh well he would know

so those excesses may have been tacky

but tacky doesn't send you to jail far

more serious was the allegation that

Koslowski literally stole money from Tao

he and his second in command Mark

Schwarz were charged with stealing $170

million and pocketing an additional 430

million through the sale of Company's

stock while lying about Tao's Financial

condition the prosecution accused Kowski

of granting himself unauthorized bonuses

and running hundreds of Millions ions of

dollars worth of personal expenses

through interest free Tao loan programs

no expense was too great or too small to

run through Tao none of this claims the

prosecution was authorized by The Tao

board and the jury agreed guilty but

he's still fighting I am absolutely not

guilty of the charges that were brought

upon me there was no Criminal Intent

here nothing was hidden there were no

shredded documents nobody was told not

to say anything uh all the information

the prosecutors got was directly off the

books and records of the company in the

trial Kowski took the stand and

testified that everything he did was

authorized he'd already repaid many of

the loans and claimed he was simply an

overworked executive who left the

details for underlings to handle I was

pushing the company and growing the

company and pushing all aspects of it to

continue to grow uh I just don't think

we put enough infrastructure in place to

support some of that growth yeah but

some of the some of the lines got

blurred uh some of the lines between

what was your money what was Tao's money

became very fuzzy I think I did

everything accordingly to U you know the

way the programs were outlined and the

way it was done by my predecessors was

there a situation where the rules got

lost more as I said we an appeal on this

and there's also civil litigation so at

this point in time I think we're

crossing the line here the Tao board had

given Kowski virtual card blanch and the

one person kazlowski said could clear it

all up the head of compensation was dead

whatever kazlowski did it was clear that

the Tao board was not exactly meticulous

in carrying out its oversight even so

Kowski believes he was a dead duck from

the start I was a guy sitting in

courtroom who made 100 million a year

and I think a juror sitting there just

would have to say all that money he must

have done something wrong I I think it's

just you know it's as simple as that

kazlowski says he was done in by bad

timing the Enron and Worldcom

catastrophes he feels that most people

believe that's what happened to Tao that

employees were left high and dry but Tao

remains a thriving $60 billion Company

the company went on after I left there

the company is alive say it's doing well

does it make you angry to be lumped in

with guys like Bernie abs and kenl that

just frustrated me to know end these are

companies that had financial and

accounting schemes that had major scams

that wasn't Tao you know this was a this

is a major paid dispute but the jury

didn't see it that way he was sentenced

to 8 to 25 years in ordered to pay

restitution and fines of almost $200

million it's unclear if he'll have any

money left when he's released in the

meantime he spends much of his time in

prison focused on his appeal he can

receive visitors on the weekends but he

says he has few friends left in the

final analysis most of the people were

close to you because of your power and

your wealth that's correct and and they

wanted to share in that that was

probably 90% of the people in my life

and they didn't give a DB about Dennis

kosowski the man that's a that's a hard

thing to uh to reconcile yourself to but

it did happen and it was not just his

friends who left him darling how about K

oh we're divorcing and uh you know

that's we're moving on uh so but was his

marriage like so many things in his life

all about money Welly we're in the

middle of divorce and agreement I'm not

going to say anything about that you

know at this time he says he tries to

stay positive he's 60 years old now and

the harsh reality of his predicament is

inescapable when you're sleeping in jail

you wake up all the time because there's

a light on all night so you kind of wake

up every hour wishing and praying and

hoping it was just a dream no but it's

not it's reality and it's you know where

you are often times guys get religion

inside does that happen with you there's

a spiritual side that you know I think

about and and reflect on from time to

time but that's personal and private num

within me yeah and you've got the time

to do it now I plenty of time yes that I

have