Dennis Kozlowski: Prisoner 05A4820

This segment was originally broadcast on March 25, 2007. It was updated on July 23, 2007.

A year ago or so, the air was thick with tales of corporate scandal, lost pension funds, big time theft and even bigger time prison sentences for the Enron gang. Then there was Dennis Kozlowski, CEO of Tyco, who was found guilty of – in effect – using Tyco's immense financial resources for what the prosecution described as his "own personal piggy bank."

You might remember the $6,000 shower curtain, and stealing over $100 million from the company.

60 Minutes correspondent Morley Safer wondered how the man, who could whistle up a corporate jet on a whim or throw a two million dollar birthday party, was doing in his reduced circumstances and what's it like to go from "king of the world," to prisoner #05A4820, serving eight to 25 years behind bars.

"In my wildest imagination, when I would project myself into my late 50's and early 60's, where I would be or what I would be doing. If I make a list of a hundred different places, or a hundred different things, here would never make that list," Kozlowski tells Safer.

He now earns a dollar a day, mopping floors and slinging hash to his fellow inmates. In January, Kozlowski spent a week in the hospital with a heart ailment and got to thinking.

Kozlowski has not really talked publicly until now; asked why he decided to speak now, he says, "When I was in the hospital in January, I was outside in the emergency room, feeling really uncomfortable and frightened. And that's when I've, you know, really made the firm decision that I wanted to go through and talk to you at this time."

He says he became very aware of his own mortality, and didn't want to leave the world "without at least an opportunity to talk about my side of the story, to the extent that I can talk about it."

He agreed to speak with one stipulation — that 60 Minutes would not include anyone else in this story.

Because of an appeal, he will not discuss the details of his case, but he will say he believes in the judicial system. "I think all that works. But in this case, the jury got it wrong."

That jury convicted him of 22 counts of grand larceny, conspiracy and securities fraud. His trials occurred in the wake of a white-collar crime wave: Enron, WorldCom and Martha Stewart.

The newshounds smelled blood. Accused of looting his company of hundreds of millions of dollars and living the life of a pasha at stockholder's expense, he was the living, breathing version of "Wall Street's" Gordon Gekko.

Up to a point: what is puzzling is why does a man who struggled so hard, so effectively to make it become so careless and stupid and arrogant? Born in a tenement on the wrong side of the tracks in Newark, N.J., Kozlowski worked his way through school.

"I played guitar in a band. I worked in a pharmacy. I worked in a carwash. So, you know, I had two or three jobs going at any given time, you know," he explains.

Where he grew up, Kozlowski says there weren't that many options. "Growing up in Newark, New Jersey, at the time, you know, you never thought of yourself growing up to become a CEO," he says.

He started at Tyco, then a small New Hampshire manufacturing company, as an accountant making $28,000 a year and worked his way up to CEO. He became known as "Deal-a-Day Dennis," constantly acquiring new businesses, and building Tyco from a $40 million company into a $40 billion conglomerate.

Wall Street couldn't get enough of the young aggressive CEO. He also began making staggering amounts of money, among the top earning CEOs in the country.

"We had a pay-for-performance culture at Tyco," explains Kozlowski. "So, most of the money I earned was in the appreciation of Tyco stock."

"One year you made, I think, $170 million," Safer remarks.

"I'm not sure 170, but I made over $100 million, yeah," the former CEO acknowledges.

Asked what it was like to earn that kind of money, Kozlowski says, "It's a way of keeping score, I guess."

Keeping score meant keeping up with the masters of the universe – $30 million to build a mansion in Florida, plus acquiring homes in Nantucket and Colorado. And for $16 million, he bought a vintage yacht, "Endeavour."

Wealth meant one thing, social acceptance another. He and his second wife Karen Mayo decided art was one way of getting it. They spent millions on paintings and he joined the board of the Whitney Museum.

For a pied-à-terre in New York, he had Tyco buy a $19 million apartment and decorated it with $11 million worth of stuff. The poor kid from Newark had made it to Fifth Avenue.

"Would Dennis Kozlowski, a few years ago, even [have] contemplated going to Europe to buy old master paintings?" Safer asks.

"No, absolutely not," Kozlowski admits. "You know, it came with earning the amount of money I was earning at the time."

Kozlowski says joining the board of the Whitney Museum wasn't his idea – he was invited. And he says he never made a board meeting.

"But you were invited because they like having really rich guys on the board, correct?" Safer asks.

"I assume it wasn't for my knowledge of art," Kozlowski says.

But it was the purchase of that art that would lead to his undoing. The Manhattan District Attorney's Office happened to be investigating art galleries that were helping customers avoid sales tax. Kozlowski had purchased $13 million worth of paintings, including a Renoir and Monet, for the Tyco apartment, but prosecutors said he had them shipped to Tyco's offices in New Hampshire – a state without sales tax. They were then trucked back to New York.

In 2002, The Manhattan District Attorney's Office indicted Kozlowski for evading over $1 million in sales tax and he resigned as CEO of Tyco.

But that was only the beginning. The Tyco board investigated its CEO's behavior and made public a report that was devastating; Kozlowski's excesses were revealed in excruciating detail.

Decorations for the New York apartment became classic tabloid headlines, mocking the CEO's taste and his greed, like the $15,000 doggy umbrella stand and the ultimate symbol of his downfall: a $6,000 shower curtain.

Kozlowski says the media coverage was "horrible." Yet he did sign off on the décor.

"I signed off on a decorator to decorate, you know, the Tyco apartment. And, beyond that, that was my involvement. I, the first time I heard about that shower curtain, the first time was after I was out of the company and I read about it in a newspaper. And I was calling around asking: 'Where is this shower curtain?' But to this day, I wouldn't know it if it fell on me," he tells Safer.

And then there was the 40th birthday party for Kozlowski's wife Karen on Sardinia. It was togas galore, a four day festival of flesh. Jimmy Buffett was flown in for the music and guests were treated to a special cake: an anatomically correct woman with exploding breasts.

The cost of the party was over $2 million; since Kozlowski claimed it was in part a work retreat, Tyco footed half the bill.

During the trial, jurors were shown a tape of the party. Kozlowski says it was "absolutely horrible."

"It was over the top, you know. I was taken aback by it, but I smiled and worked my through it, wanted the night to end as fast as I could," he recalls.

"Donald Trump called your behavior tacky," Safer remarks.

"Tacky? Tacky from Donald Trump?" Kozlowski replies. "Wow. But he would know."

Those excesses may have been tacky, but tacky doesn't send you to jail. Far more serious was the allegation that Kozlowski literally stole money from Tyco.

He and his second-in-command Mark Swartz were charged with stealing $170 million and pocketing an additional $430 million through the sale of company stock, while lying about Tyco's financial condition.

The prosecution accused Kozlowski of granting himself unauthorized bonuses and running hundreds of millions of dollars worth of personal expenses through interest-free Tyco loan programs. No expense was too great or too small to run through Tyco. None of this, claimed the prosecution, was authorized by the Tyco board.

"I am absolutely not guilty of the charges brought upon me," Kozlowski says. "There was no criminal intent here. Nothing was hidden. There were no shredded documents. Nobody was told not to say anything. All the information the prosecutors got was directly off the books and records of the company."

In the trial Kozlowski took the stand, and testified that everything he did was authorized. But he did not have a single document to prove it. He had already repaid many of the loans and claimed he was simply an overworked executive who left the details for underlings to handle.

"I was pushing the company, and growing the company and pushing all aspects of it to continue to grow and I just don't think we put enough infra-structure in place to support some of that growth," Kozlowski says.

"Yeah, but some of the lines got blurred, correct? Some of the lines between what was your money, what was Tyco's money became very fuzzy," Safer remarks.

"I think I did everything accordingly to you know, the way the programs were outlined, and the way it was done by my predecessors," he says.

Asked if there was a situation where the rules got lost, Kozlowski says, "Morley, as I said, you know, we're in appeal on this, and there's also civil litigation, so at this point in time I think we're crossing the line here."

The Tyco board had given Kozlowski virtual carte blanche and the one person Kozlowski said could clear it all up, the head of compensation, was dead.

Whatever Kozlowski did, it was clear that the Tyco board was not exactly meticulous in carrying out its oversight. But the jury believed that Kozlowski was guilty of grand larceny. Even so, Kozlowski believes he was a "dead duck" from the start.

"I was a guy sitting in a courtroom who made $100 million a year. And I think a juror sitting there just would have to say, 'All that money, he musta done somethin' wrong.' I think it's as you know, it's as simple as that," he says.

Kozlowski says he was done in by bad timing: the Enron and WorldCom catastrophes. He feels that most people believe that's what happened to Tyco—that employees were left high and dry. But Tyco remains a thriving $60 billion company.

"The company went on after I left there. The company is alive today. It's doing well," Kozlowski says.

Asked if it makes him angry to be lumped together with Ken Lay and Bernie Ebbers, Kozlowski tells Safer, "That just frustrated me to no end. These are companies that had financial and accounting schemes, that had major scams, and that wasn't Tyco. You know, this was a major pay dispute."

But the jury didn't see it that way. He was sentenced to eight to 25 years and ordered to pay restitution and fines of almost $200 million. It's unclear if he'll have any money left when he is released.

In the meantime, he spends much of his time in prison focused on his appeal. He can receive visitors on the weekends, but he says he has few friends left.

"In the final analysis, most of the people were close to you because of your power and your wealth?" Safer asks.

"That's correct. And they wanted to share in that. That was probably 90 percent of the people in my life," Kozlowski says.

And it is not just his friends who have left him – he and his wife Karen are divorcing.

Asked if the marriage was all about money, Kozlowski says, "Morley, we're in the middle of a divorce and agreement. I'm not going to say anything about that, you know, at this time."

He says he tries to stay positive. He's 60 years old now, but the harsh reality of his predicament is inescapable.

"When you're sleeping in jail, you wake up all the time because there's a light on all nigh. So you kinda wake up every hour, hoping and wishing and praying and hoping it was just a dream, you know. It's reality and it's where you are," Kozlowski says.

"Often times, guys get religion inside. Has that happened with you?" Safer asks.

"There's a spiritual side that, you know, I think about and reflect on from time to time. But that's personal and private, you know, within me," he replies.

"Yeah. And you've got the time to do it now," Safer remarks.

"I have plenty of time," Kozlowski says. "Yes. That I have. Yeah."
Produced By Deirdre Naphin