Ex-Tyco director pays $22m fines
Wednesday 18 December 2002
Frank Walsh, the former head of Tyco's corporate governance committee, pleaded guilty to securities fraud charges yesterday and paid more than $22m (£13.8m) in fines and reparations in connection with the US conglomerate's purchase of the finance company CIT Group in June 2001.
Walsh, who resigned from Tyco's board earlier this year, pleaded guilty to charges that he failed to disclose to other board members that he would be paid a $20m "finder's fee" for Tyco's $9.5bn CIT acquisition. Tyco sold CIT earlier this year for about half that amount.
Walsh allegedly worked out the fee deal with Tyco's former chairman, Dennis Kozlowski. Prosecutors charge that when Walsh learned of Tyco's interest in buying CIT, he arranged a meeting in early 2001 between Mr Kozlowski and CIT's chief executive. After the meeting, Mr Kozlowski told Walsh that if the acquisition was successful, Walsh would receive an investment banking or finder's fee for his services.
At an arraignment in Manhattan Supreme Court, Walsh said he received $10m directly while $10m was donated to the Community Foundation of New Jersey, a charity he recommended.
The State Supreme Court judge Michael Odus sentenced him to a conditional discharge, provided that he repay the $20m to Tyco, pay $2.5m in fines to New York City and state and another $250,000 in fines to prosecutors. He wrote the cheques on the spot.
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