SECURITIES FRAUD Ex-Tyco director avoids jail time

For setting up a meeting, a Tyco director and his favorite charity received $20 million.
NEW YORK (AP) -- A former director of Tyco International has paid $22.5 million in restitution and fines after pleading guilty to securities fraud by arranging a Tyco acquisition and failing to tell fellow board members about his payment from the deal.
Frank E. Walsh Jr., 61, avoided jail time Tuesday in a plea deal with the Manhattan district attorney. Walsh agreed to pay a $2.5 million fine and to repay Tyco the entire $20 million it had given him and a charity.
To settle a related Securities and Exchange Commission lawsuit, the former Tyco board member also agreed to never again serve as an officer of a publicly traded company.
His case is just one of the allegations involving undisclosed payments and loans to Tyco executives and insiders.
According to prosecutors, Walsh learned of Tyco's interest in buying the CIT Group, a financial services company. He arranged a meeting in early 2001 between then-Tyco chairman and CEO L. Dennis Kozlowski and CIT's chief executive. After the meeting, Kozlowski told Walsh he would receive a fee if the acquisition was completed.
Tyco payments
Along with a $10 million direct payment to Walsh, Tyco contributed another $10 million to the Community Foundation of New Jersey, a charity that Walsh had recommended. Tyco paid those funds in July 2001, but the board did not learn of the payments until six months later.
Assistant District Attorney John Moscow, the lead prosecutor in the Tyco cases, said the charity will be allowed to keep the money. The $10 million it received will be repaid from Walsh's personal funds.
Walsh admitted that he failed to tell his own board of directors that the company was paying $20 million in "finder's fees" in exchange for his help in brokering Tyco's acquisition of CIT Group.
Kozlowski and former Tyco chief financial officer Mark Swartz knew of the payments but did not disclose them to the board, Walsh said in court Tuesday. Both have been indicted on charges of stealing more than $600 million from Tyco, and are expected to go on trial in June. The men have pleaded innocent.