Judge paves way for SEC suit against Kozlowski, Swartz

The U.S. Securities and Exchange Commission’s civil case against former Tyco International Ltd. top executives L. Dennis Kozlowski and Mark H. Swartz has been given the green light following a federal judge’s decision to lift a stay on discovery in the suit.

By lifting the stay, U.S. District Judge Robert W. Sweet now allows the sides in the case to exchange evidence and prepare for trial.

Mark A. Belnick, the Bermuda conglomerate’s former general counsel, also is a defendant in the SEC case.

The civil case had been put on hold pending the outcome of the criminal prosecution against Kozlowski and Swartz, the former CEO and CFO, respectively, who were found guilty on state charges of looting millions of dollars from the company.

In his order, Judge Sweet said he was advised by letter in early October that “in light of the status of the (New York) state criminal proceedings the District Attorney no longer requires that discovery (or any other aspect of the SEC action) be stayed.”

Kozlowski and Swartz were sentenced in August to 8-1/3 years to 25 years in prison and ordered to pay $240 million in fines and restitution.

They were found guilty of 22 of 23 counts each, which included grand larceny, conspiracy and securities fraud.

Belnick was acquitted of criminal charges in a separate trial.

Tyco, which is headquartered in Bermuda, operates out of West Windsor, N.J., but was based in Exeter, N.H., when Kozlowski and Swartz committed their crimes. – JEFF FEINGOLD