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Morgenthau Leaves Legacy Of Fighting Tax Havens, Tyco CEO

James Nani
July 24, 2019

John Moscow spoke to Law360 regarding the investigation of Tyco International by the Manhattan district attorney's office under Robert Morgenthau.

Moscow remembers telling Morgenthau that Kozlowski cheated on millions of dollars in sales and use taxes and said the office could just make him pay back the $3 million or prosecute him. The conversation happened at the beginning of 2002 after the 2001 meltdown at Enron, Moscow said, and when there were several other senior executives in the news who turned out to be crooks.

“He said ‘to hell with it, prosecute them,’” Moscow said.

Kozlowski ended up being indicted for the criminal evasion of the payment of tax on the sale of 12 paintings, including a Monet and a Renoir, according to Pace Law School professor Bridget Crawford.

In the end, Kozlowski ended up paying $3.2 million — $2 million in unpaid sales tax and $1.2 million in interest and penalties, she said. He also paid $17.9 million to settle state and city income tax evasion charges, less than half of which was actual tax liability, with a big chunk reflecting interest and penalties, Crawford said. The case eventually ballooned into a larger investigation that ensnared Kozlowski and Tyco.

Pursuing Kozlowski stemmed from Morgenthau’s concern about fairness, the perception of justice by the public and the belief that you shouldn’t allow the wealthy to get away with crimes for which the less wealthy would be prosecuted, Moscow said.

“He said ‘we need to prosecute crimes in the suites as well as crime in the streets,’” Moscow said.

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