Ex-CEO Used Tyco Funds for Personal Expenses

Oct. 11, 2002 -- In an era of unsurpassed corporate greed, where executives have enjoyed palatial mansions, private jets and $100 million salaries, it may be the $6,000 shower curtain that is remembered best.

Dennis Kozlowski, the former CEO of Tyco International Ltd. who is facing charges of enterprise corruption and grand larceny, paid a whopping $6,000 for his shower curtain — $6,000 of his company's money.

David Boies, one of the country's best-known lawyers (he represented then-Vice President Al Gore in the Florida presidential vote recount of 2000), discovered the shower curtain after being hired by the Tyco board to investigate the company's own top officers on April 30, 2002.

The existence of the tasseled, gold and burgundy floral shower curtain was documented deep within Tyco company records.

"This was one of the most highly compensated executives in the world," said Boies. "If he wanted a $6,000 shower curtain, he could have bought it himself."

Not to mention a few other decorating touches for Kozlowski and his wife — including a $15,000 umbrella stand, a $6,300 sewing basket end table, a $17,000 toiletries case, a $2,900 wastepaper basket, 17th-century antiques and more than $500,000 in draperies, according to Boies.

Some $25 million in loans to Kozlowski from Tyco simply disappeared, Boies said. "They just made a journal entry and with a stroke of the pen, reduced Kozlowski's liability by $25 million.

"In effect, he borrowed the money and he didn't have to pay it back," said Boies.

Trying to Hide Spent Money

Kozlowski has pleaded not guilty to enterprise corruption and grand larceny.

"Lots of people buy things that don't seem to me to make a lot of sense," said Boies. "But here, what you had was somebody spending the company's money, the shareholders' money, and that was what was wrong."

And according to Boies, they were trying to hide it all, along with company money spent on a 40th birthday party for Kozlowski's wife, Karen, at a five-star resort on the Italian island of Sardinia.

Chef Franco Guardone at the Hotel Cali Di Volpe Resort in scenic Costa Smeralda remembers it well. "There were men and women dressed in ancient Roman costume and the food was rather classical," he told ABCNEWS. "There was a lot of caviar."

The scene at the pool, described in a Tyco interoffice e-mail, featured an ice sculpture based on Michelangelo's David. An e-mail written by the event's party planner describes a scene in which "a waiter is pouring Stoli vodka into his [the statue David's] back so it comes out his penis into a crystal glass."

Guardone, who helped create the ice sculpture, says it was a big hit.

"[Guests] put their glass [under the ice sculpture's penis] and the vodka would fill it up," said the chef, laughing. "The ladies really liked it."

The grand finale was a life-size cake made to look like the birthday girl.

"The cake was brought out by good-looking guys, scantily dressed as Romans, who carried it as if they were carrying a woman resting on the bed," said Guardone. "When the woman cut the cake, the breasts exploded."

And $1 million in company money was gone.

Click here to read the event planner's description of the birthday party

Millions of Tyco’s Money Spent on Homes

When Boies was asked if this was theft, in his opinion, he said, "Well, we call it larceny. You can call it theft. It's certainly wrong."

But the amount spent on the party was small change, Boies says, compared to the millions Kozlowski used to buy his homes: a $10 million mansion in Florida, a $16 million apartment on Fifth Avenue in New York and a stunning, $5 million oceanfront estate on the Massachusetts island of Nantucket.

Tyco paid for all of these homes with company money — loans that were simply wiped off the books, according to a document Boies says he discovered in his investigation.

"When we found that," said Boies, "I mean, that was a real smoking gun."

The son of a Newark, N.J., policeman, Kozlowski took easily to the life of a multimillionaire.

He bought the famed sailing yacht Endeavor, actually using his own money in this case, and could be seen sailing around Nantucket, with the help of a full-time crew of nine.

Some say Boies should be credited for bringing down a corrupt corporate executive, but he thinks Kozlowski was brought down by his own actions.

"This was a person who could have indulged his desires and his tastes with his own money," said Boies. "What led him to do what he did, I just can't answer for it."