New Jersey to collect from, pay Tyco

New Jersey will collect $73 million from Tyco International Ltd. and two other companies to settle a fraud lawsuit filed on behalf of the state workers' pension fund after the industrial conglomerate's stock price collapsed in 2002.

 

At the same time, New Jersey is preparing to pay Tyco International $11 million as a reward for moving its headquarters from New Hampshire to Princeton in 2003.

 

Tyco was a popular stock among mutual fund and pension managers in the 1990s, but it lost $90 billion in value in early 2002 as New York officials accused then-chief executive officer L. Dennis Kozlowski and chief financial officer Mark Swartz of stealing corporate funds.

 

The two were convicted by a New York state court three years ago of illegally taking more than $100 million from the company, and sentenced to prison. Kozlowski's successor, Ed Breen, broke Tyco into three companies after Kozlowski's vision of a high-profit empire to rival General Electric Co. proved unworkable.

 

Attorney General Anne Milgram announced the settlement of the suit against Tyco, its top lawyer, and four directors. Tyco Electronics Ltd., of Berwyn, and Tyco's former health-products business, Covidien Inc., of Mansfield, Mass., will help pay the settlement, said Tyco International spokesman Paul Fitzhenry.

 

In a statement, Milgram said the settlement cleared the way for reimbursement of four years' promised Business Employment Incentive Program payments that had been delayed by the suit, pending final approval by officials at the state Economic Development Authority.

 

While the state settled charges against the company, it is still pursuing claims against Kozlowski, two other company officials, and accountant PricewaterhouseCoopers L.L.P.

 

Pennsylvania, which also invested state pension funds in Tyco, joined other investors in a separate lawsuit, a federal class action that resulted in a $3 billion settlement last year.

 

"We do not yet know how much we will recover, and it probably will be quite some time before we do," said Robert Gentzel, a spokesman for the Pennsylvania State Employees' Retirement System.

 


Contact staff writer Joseph N. DiStefano at 215-854-5194 or jdistefano@phillynews.com.