Tyco liability insurer seeks recovery of legal fees from ex-CEO

[JURIST] Corporate Officers & Directors Assurance Ltd. (CODA), a subsidiary of ACE Bermuda [corporate website], has filed a petition in a New York trial court requesting an order compelling former Tyco International [corporate website] CEO L. Dennis Kozlowski [JURIST news archive] to pay the insurer approximately $1.97 million. CODA provided directors and officers liability insurance to Kozlowski, and won an arbitration award in the UK for the recovery of money paid in legal fees to the former executive. Kozlowski was found guilty of grand larceny [JURIST report] in 2005 for misappropriating corporate funds and is currently in prison. The petition, filed Friday, seeks to enforce that arbitration award as well as recover costs associated with the UK litigation. Kozlowski previously attempted to recover expenses for his defense from CODA and other insurers in a lawsuit.

Tyco suffered one of the most infamous corporate fraud scandals [JURIST news archive] in modern times relating to the convictions of Kozlowski and former CFO Mark Swartz, who were found guilty of looting the company and defrauding its shareholders out of more than $150 million in unauthorized personal compensation. In 2005, they were sentenced to prison [JURIST report] for 8 to 25 years. Tyco settled SEC charges [JURIST report] of fraudulent accounting in April 2006 for $50 million. In July, a federal judge preliminarily approved [JURIST report] a $3.2 billion settlement agreement [JURIST report] between Tyco International, Tyco's former auditor PricewaterhouseCoopers [corporate website], and investors who were harmed by fraudulent accounting practices orchestrated by Tyco's former top executives. AP has more.



 

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