Judge Drops a Top Charge Against Tyco Ex-Officers

A judge in one of the biggest corporate corruption cases in U.S. history Friday threw out one of the most serious charges against the two former top executives accused of looting Tyco International Ltd.

New York State Supreme Court Justice Michael Obus dismissed a single count of enterprise corruption, which carries a sentence of up to 25 years in prison. But he left intact the rest of the 33-count indictment against former Tyco Chairman L. Dennis Kozlowski and former Chief Financial Officer Mark Swartz.

Legal experts called the judge’s decision a victory for the defense but said it might also be a blessing for prosecutors because it simplified a case that grew complicated during five months of testimony.

“Submission of enterprise corruption is not appropriate in this case,� Obus said in a ruling from the bench. The charge is usually used to prosecute organized crime leaders.

Prosecutors alleged Kozlowski and Swartz created an enterprise within the Bermuda-based conglomerate to obtain money by theft, fraud, false records and bribery.

Kozlowski and Swartz still face charges of grand larceny, conspiracy, securities fraud and falsifying business records. Those remaining charges carry prison sentences of up to 25 years.

Jury deliberations are expected to begin Thursday after closing arguments early next week. Both men have denied any wrongdoing in a trial that began in September.

Obus said he had serious reservations about the securities fraud charge, but let it stand. The former executives are accused of looting Tyco by obtaining $430 million through fraudulent stock sales and stealing an additional $170 million by tapping loan and bonus programs without board approval.

“Anytime you get rid of a charge, it’s great for the defense,� said Frank Razzano, a former federal prosecutor who is a securities lawyer for Dickstein Shapiro Morin & Oshinsky.

“Enterprise corruption comes with a complicated instruction to the jury,� Razzano said.

“The jury often gets very confused on those charges.�

Last month, Obus expressed doubt about the enterprise corruption charge, saying he upheld the charge before the trial began on the theory that there could be a two-man enterprise.