Kit Menkin's Leasing News
www.leasingnews.org Friday, September 13, 2002
Accurate, fair and unbiased news for the equipment Leasing Industry
--posted daily at www.leasingnews.org---
Tuesday Leasing News posted at 10:15 am PDT
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Pictures from the Past
(I thought readers would like to see how I looked, and also my
significant other for 18 years!!! I had more hair then, by the way.)
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Monday---Sept 11, 2001 and 2002 Economy
Most Likely--Reaction to Richard Shapiro Controversy
by Christopher Menkin
A lot has changed since I last spoke with you.
I have ended my Leasing career.
My Wife & I sold our Home in Anaheim and we have moved to Marina Del Rey
with our 19 month.old son named Westin.
We made great money on the sell of our home and we had good savings
already so we have changed gears and along with 9/11 have put life more in
prospective, Linda will be going back to school in Feb toward a LVN
License and I'v started a street Vending Business selling coffee and juices, I
start my first location 9/16/02 in front of the West Los Angeles Courthouse.
Saddleback Financial really took the wind out of my sail, they still owe
me for my last (5) deals, over $425,000 of business and a lot of
commissions and they’re not the only company that got me, American Medical Capital
which was owned by Tony Ricco filed for BK a couple of months ago and I had
(1) deal in funding with them for $86,000, I will never see any of these
commissions, over $16,000.
As an ex-commission salesman, I plan on paying my own paycheck for a
Kit, to be honest, starting next week I'm going to be Street Vending 5-7
days a week and now that I'm not working in Leasing I'm not emotional
connected, If the Conference is on the Weekend I can do it.
Let me know.
At one time he was the top salesmen out of fifteen at Saddleback Financial.
At the beginning of the year, I went through several lists of salesman from
readers for the San Diego United Association of Equipment Leasing
Association Fall “Top Gun” Conference.
There were over two-dozen on the list, all in a category of making over $250,000
in 1990, perhaps 1991. One current salesman made $2 million in commissions,
but did not want to fly from Florida (confirmed by his sales manager.) He doesn’t attend conferences; doesn’t have the time, but call him again, if it is another date. Another who it was verified from an employer had made $750,000, but was going to a wedding on October 5th. Shawn Giffin would make it, but it appears he is going to the same wedding. Most turned me down. One who did not was Richard Shapiro. He was full of enthusiasm.
In the original group that I asked were three considered by Convention Chairman John Kruse and the UAEL executive board as “too controversial.” People will not turn out,
I was told, because they are hated in the industry. I knew this was from people
who were jealous or believed the rumors. I had not only chosen them from
the list, but invited them. My position was very simple, not a bluff. If you
want me to “dis-invite” them, I would not only pull out from doing the workshop,
but resign as a director. You invited me to do the workshops, gave me no restrictions,
these were people I respected, and had “talked into” appearing. They didn’t volunteer.
It took me many conversations, e-mails, and having others also call them to say “yes.”
After a “trade,” I was allowed to keep them on the workshop panel, with the understanding this was Leasing News, and would “not soil” the association.
When it was learned Richard Shapiro was no longer in the leasing industry,
I was told by the UAEL Convention Chairman John Kruse it was not “appropriate”
to have him appear. The UAEL Executive Board was also taking this
“opinion” and I was to “dis-invite” him.
“People will walk out of the workshop if you have Shapiro there, “ I was told
in one e-mail.
My position was this should be his prerogative, not ours, as I felt his opinion
and story and feelings were still valid, perhaps even more so. I felt it would
be not polite to “dis-invite” him. Again, I stood my ground...but before doing so, I consulted the Leasing News Advisory Board. Thirteen people serve, and one of the things they do is “keep me in line.” I cannot think of a time I have not followed their consensus of opinion. In fact, there are several I disagreed, but I deferred to them.
Due to the time difference, I was not able to get permission to quote all
them ( When you see an e-mail printed in Leasing News, it is after I received permission from the sender to quote them).
I see no harm in letting Richard Shapiro participate on the panel, at
his option. Leasing is an entrepreneurial business and all great
commission sales people are literally, "self employed". The same sales
techniques that made me a hugely successful copier salesperson
translated well to the leasing industry when I made the switch. I am
still the top producer in our company and the person that everyone comes
to when it is actually time to close the sale. The ability to close is
what separates the pretenders from the contenders and the champions.
As far as "speakers" being in the leasing industry, since when did that
become a requirement.
Maybe some people would like to hear exactly why a Top Gun like Richard
Shapiro has lost his passion for the industry. Maybe it will stimulate
some thinking with respect to ethics as the lapse of ethics at Saddle
Back appears to have a lot to do with driving a Top Gun sales rep out of
the Biz. Maybe some people will think twice about the way they treat
their sales people or other good employees. Maybe some others will want
to ask him why he left and why he seems to have lost his passion for the
Personally, I think that his story demonstrates that "Top Gun" sales people are motivated by far more than money. He could have made the same money elsewhere but instead he decided to work a Kiosk selling coffee and juices?? Huh?? This guy has a story that we can learn from.
The last time I checked, the opportunity to learn from the successes and/or mistakes of others was one of the best reasons for attending an industry conference. The willingness to share those experiences with each other was always a hallmark of the UAEL/WAEL group that I never saw at other associations.
1-800-321-LEAS (5327)x 101
I agree with John Kruse that someone who has left the industry
does not belong on a UAEL panel.
I can appreciate your frustration with UAEL; I find it typical of trade
associations that few people are willing to do the hard work but many are
eager to criticize if things don't go the way they would like. The leasing
industry is made up of many very intelligent people, each with their own ax
to grind. I have often followed the policy of biting my tongue and backing
off from potential confrontations. Of course, unlike you, in my business it
is important to try to maintain good relations with everyone in the leasing
Is it worth having a big fight to keep Shapiro on the panel? Life is too
Kit , why are you wasting your time on this nonsense ?
"Global Financial Services 17 State Street new York NY 10155 Phone 212-935-4370 Fax 212-935-4378 Web www.globaleasing.com email firstname.lastname@example.org" <email@example.com>
I wonder what the reaction of the Executive Committee would be if
ex-WAEL presidents Hal Horowitz or Bob Jacobson, both now out of the leasing
business, wanted to appear on a similar panel and talk about their successes
while they were in equipment leasing? I think they would be welcomed.
There are a lot of people who have skills which can be useful in any
business. Sales skills don't recognize any industry limitations. The way I
see it, your panelists will be talking about how to get sales, not how to
Tell 'em that!
Bob Teichman, CLP
Teichman Financial Training
3030 Bridgeway, Suite 213
Sausalito, CA 94965
"Providing education and training to the equipment leasing and financing
Mark and CarolAnn McQuitty
The Republic Group, Inc.
(of Anaheim, CA)
---Mark comments at the time they had one child, and
now they have three more---
October 5, 2002 San Diego United Association of Equipment Leasing
Annual Conference and Exhibition "Top Gun"
Leasing News will present two workshops
9:45am "Top Gun Salespeople"
11:00am "Tom Gun " Sales Managers
The first session will include the Urban Legend Jim Raeder, star of stage, screen,
and outer space. Many people are jealous of his success and started rumors about
him. Ex-salesmen who worked for him love him or hate him. At one time,
he had salesmen making $750,000 and a million dollars a year in commissions.
It will also include Igancio Sanchez, Tri-Star Capital, Richar Shapiro, Anthony “Tony” Sherwin, Pacifica Capital, and Eric Sidebotham, Gensis Capital.
The second session: “Top Gun” Sales Managers: Richard Baccaro, American Equipment ( formerly Sierra Cities/American Business Express Finance), Brad Kissler, Balboa Capital, and Mark McQuitty, Capitalwerks.
McQuitty is a genius, in my opinion, who foresaw the demise of the dot.com industry
and internet leasing ( he has letters to former Sierra Cities Tom Depping “warning”
him about it---I have copies of them.) He was also instrumental, along with Jim Raeder,
in modernizing equipment leasing sales.
“Old Timers” have their view, and people new to the industry, only now rumors.
Here is the real history of how Mark McQuitty got into leasing, tracing his involvement
and “life” until today.
I suggest you download it, print it out, and take home to read over the weekend.
It is very worthwhile reading about someone people consider “controversial.”
If you haven’t read our feature article from last year, you might
want to take it along, too.
Whatever Happened to Republic Leasing of Anaheim.
( see you in San Diego, I hope ( www.uael.org ). Kit Menkin
Please send to a colleague as they may not be receiving due to technical difficulties,
or perhaps they do not subscribe. Thank you for your support.
It looks like have made a big upgrade in your technology. I hope it's
working well for you.
Just to keep you up to date, the September edition of Business Leasing News
(BLN) just launched and is available at
http://www.pblaw.com/newsletters/bln. I am pleased let you know that the BLN
web site now has both a new search engine and new subscribe feature to allow
readers and new visitors to subscribe to the direct e-mail of BLN each month
and to search any of BLN's articles.
This Business Leasing News also includes a new section called "BLN Briefs: Updates and Short Takes on Issues of the Moment" and other improvements.
Keep up the good work on your reporting.
All the best,
David G. Mayer
Patton Boggs LLP
2001 Ross Avenue
Dallas, Texas 75201
Tel: (214) 758-1545
Fax: (214) 758-1550
Author of: Business Leasing For Dummies
Publisher of: Business Leasing News
(Thank you. We hope to migrate to the Sun Cobolt machine over the weekend.
We have found Microsoft to not be very secure to hackers and other internet
problems, such as sending out our newsletter. We are going totally Unix
for the internet. Editor )
''We are not only forecasting total home sales in 2002 will exceed last year's volume to reach an all-time record number, but also that mortgage rates will average only slightly above current levels in 2003,'' he said.
By Associated Press
WASHINGTON (AP) Rates on 30-year mortgages nudged up this week but still hovered near the lowest level seen in 32 years of record keeping.
In a nationwide survey released Thursday, Freddie Mac, the mortgage company, reported that the average interest rate on a 30-year fixed-rate mortgage rose this week to 6.18 percent. That was up from last week's 6.15 percent, the lowest rate since Freddie Mac began its survey in April of 1971.
Last week's rate marked the third new low on 30-year mortgages this year. Mortgage rates have been falling amid growing signs of a sluggish economic recovery and a turbulent stock market that has sent investors to the bond market, helping to push long-term rates down.
Rates for 15-year fixed-rate mortgages, a popular option or refinancing, also moved up to 5.59 percent this week. That compared with 5.56 percent last week, the lowest level since Freddie Mac began tracking these rates in August of 1991.
However, for one-year adjustable mortgages, rates dipped to 4.32 percent, from 4.35 percent last week.
This week's mortgage rates do not include add-on fees known as points. Each loan type carried an average 0.6 point fee this week.
A year ago, 30-year mortgages averaged 6.86 percent, 15-year mortgages were 6.39 percent and one-year ARMS stood at 5.62 percent.
Frank Nothaft, Freddie Mac's chief economist, said low mortgage rates are supporting the housing market and providing more fuel to the current refinancing boom.
''We are not only forecasting total home sales in 2002 will exceed last year's volume to reach an all-time record number, but also that mortgage rates will average only slightly above current levels in 2003,'' he said.
On the Net:
Regulators Focus on Tying of Loans to More Profitable Services
By Kathleen Day
Washington Post Staff Writer
Federal regulators have launched a major review of the nation's top banks to ensure compliance with rules barring firms from linking the price or availability of loans to a corporate client's use of the bank to underwrite its stock or bond offerings.
Companies covered by the review include Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Bank One Corp. and Wachovia Corp. Each owns a commercial bank that makes traditional business loans and an investment bank that provides securities services such as selling stocks and bonds to the public.
The government's interest in the tying of loans to securities underwriting stems from fears among regulators and legislators that bankers are being pressured to weaken their lending standards to win other, more profitable business from commercial clients. Regulators worry that weaker loans could imperil the overall health of the banking industry, whose deposits are insured by an industry-funded reserve run and backed by the federal government.
The review coincides with broader scrutiny of financial conglomerates and their tying of services, such as issuing favorable analyst reports to help win stock and bond business.
The review by banking regulators was detailed in a Aug. 3 letter, made public yesterday, from Federal Reserve Board Chairman Alan Greenspan and Comptroller of the Currency John D. Hawke Jr. -- the nation's two top banking regulators -- to Rep. John D. Dingell (D-Mich.), the ranking Democrat on the House Energy and Commerce Committee.
The Aug. 3 letter was a response to a July letter from Dingell asking about tying and whether it was a problem.
The regulators had begun their review several months earlier, government sources said, after reading in media accounts that banks were tying the issuance of loans to the purchase of other services.
The law governing tying is complicated, bank executives say, and contradictory. In general, investment banks can tie their services to a loan from an affiliate bank, but banks cannot require customers to use affiliate investment bank services.
In the early 1990s, regulators reviewed lending practices after receiving complaints that banks were tying loans to the purchase of other non-loan services, but found few violations.
But new complaints in recent years from non-bank-affiliated competitors in the securities industry -- and instances of bank executives appearing to boast of the practice in public statements -- prompted regulators to refocus their attention on the issue a year ago, sources said.
By spring, after talking to business borrowers and financial industry executives, regulators decided to launch what they call a "targeted review" to examine policies, training materials and internal compliance procedures at the largest bank companies, according to the letter and to government sources.
Charging interest on loans was once the primary way banks made money, and they pushed aggressively to expand lending to corporate customers. But in recent years there have been significant changes in federal law, allowing banks to go into different kinds of business. Loans also have become less profitable.
To target the best customers and boost profits, banks are supplementing their loan businesses with investment-banking services, such as helping corporations issue stocks and bonds to the public. Investment banking can be far more lucrative than traditional lending.
For decades, selling investment-banking services was largely off-limits to banks. In 1933, in response to allegations that investment-banking activities contributed to thousands of bank failures during the Great Depression, Congress passed legislation prohibiting banks from underwriting most corporate securities.
By November 1999, Congress decided that the financial world had changed enough to warrant removing that barrier, which had been eroding anyway. It passed the Gramm-Leach-Bliley Act, which made it easier for companies to sell banking, brokerage and insurance products under one roof.
The 1999 law appears to be at odds with two other federal statutes that prohibit linking a bank loan to a customer's purchase of non-banking products, industry lawyers say.
Some Wall Street firms say tying occurs through carefully worded sales pitches from banks that don't explicitly link loans and securities services but nonetheless get the point across. Bankers deny the allegation.
"Given the historic concern about the tying of commercial and investment banking services, we have always stated that it's an area where banks should be particularly careful," said Edward L. Yingling of the American Bankers Association. "The law is very clear and provides strong protections, and certainly the type of review the regulators are undertaking is appropriate."
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1. Are You in the Latest Leasing "Who's Who?"
The pre-registration list for the ELA Annual Convention, October 13-15, is
available online, TODAY, at
These "movers and shakers" of equipment leasing will be in San Francisco
speaking, learning and building relationships. Will you?
If you want to be included in the final version of this prestigious list,
register by October 3 for the ELA Annual Convention on-line at
But don't wait! The cut-off date for hotel reservations at the special ELA
rate is September 17.
2. FASB Member Tells Lease Accountants Consolidation of SPEs on Fast Track
Financial Accounting Standards Board (FASB) member Michael Crooch told attendees at the ELA annual Lease Accountants Conference in Washington, DC on September 10, that it is the Board's intention to finalize by the end of this year a controversial proposed standard on the consolidation of Special Purpose Entities (SPEs). Citing the need for the FASB to quickly address the recent spate of high-profile corporate accounting failures, Crooch outlined a scenario by which the Board would act with uncharacteristic speed in its efforts to develop guidance regarding consolidation of SPEs. Stating that the Board's objective is to not restrict the use of SPEs but to improve financial reporting by enterprises involved with SPEs, Crooch nevertheless acknowledged that more debt undoubtedly would be put back on corporate balance sheets as a result of this proposed rule. (To download a copy of the ELA comment letter on the consolidation project, visit ELA Online, http://www.elaonline.com. Go to Industry Data/Accounting.)
Crooch told the 200 conference attendees that the FASB is attempting to improve the accounting standards-setting process in a number of ways, including adoption of a procedure in which a simple majority of the 7-member Board is required to adopt a final standard. In addition, he stated his and his fellow Board colleagues' support for the transition to principles-based vs. rules-based standards. Rules-based accounting guidance such as those governing leasing (FAS 13) have come under heavy criticism by the Board and others as offering a "cook-book" approach to standards-setting. He stated that the move toward principles-based standards would improve financial reporting if they were consistent with a conceptual framework, contained a clear statement of objectives, and included sufficient guidance through examples. He said that developing principles-based rules would enable the FASB to be more responsive and agile in responding to the needs of its many constituents.
Crooch told attendees that, in addition to rules covering the consolidation of SPEs, other projects dealing with Guarantees, Liabilities and Equity, and Stock Options would be finalized by the end of the year..
3. The Marketplace Looks Like A Workout! Large Ticket Steering Committee Meets
The LT Business Council met September 9 at ELA Headquarters. The agenda included a broad range of action items but the condition of the large ticket marketplace, particularly aircraft leasing, dominated the meeting. A confluence of two lines - a downturn in the economy including less airline travel occurring as the number of major carriers (large number of aircraft) face near disparate financial circumstances. This overcapacity in a supply dominated marketplace is leading to events such as US Airways rejecting leases in its bankruptcy and terrific pressure on lessors to accept temporary or permanent rate reductions on current leases or face getting planes back. In most cases, The Debt is in the key position to determine the outcome. This is placing aircraft lessors in a tough negotiating position. The only support will be all parties remembering that there will be a time when the airline wants financing again.
In other action, the Steering Committee:
Reviewed the status of terrorism insurance and activities to provide coverage long term. The committee agreed to have ELA Government Affairs arrange for a White Paper on the current status of liability by Finance Lessors.
Looked at pending accounting statements on guarantees and SPE's and their impact on the various large ticket products and structures. The Synthetic Lease appears most endangered depending on final standards. Members agreed that the accounting companies have greatly increased clout in putting transactions together. The issue will be addressed in accounting sessions at the ELA Convention and in Audio Conferences later this fall when final standards are issued.
Reviewed status of action and ELA positions on FSC ETI repeal. It is very important that transactions already done have their provisions grandfathered in repeal legislation.
Reviewed the general status of Treasury and IRS work / positions on LILO transaction audits. Lessors are waiting for a reply from the Treasury following a presentation and meeting earlier this summer that was done to provide some education and obtain some clarity about where IRS initiatives are going. Apparently the IRS continues to work within a model that does not reflect any reality.
Agreed that suspension of the 4th quarter depreciation provisions, which were also suspended by the Treasury in 2001, would be a good idea and could help some transactions. ELA is working the issue currently.
Laid out the plan for the 2003 Large Ticket Conference to be held April 26 - 29 in Dallas. The LT Conference has grown continually and is now one of ELA's most successful events. The conference program will focus heavily on Financial Accounting changes, tax , and overview of structuring techniques, current market issues such as bankruptcy and insurance and will focus on a particular industry. The conference also will include presentations by national affairs / economics professionals. The final program with speakers and sessions should be available by January.
The committee agreed to meet again later in the fall by teleconference.
4. Printable ELA Member Directories Now Available
Do you have a need for a printed ELA member directory at the office or while traveling? If so, you may purchase a copy of the entire member directory, including individual contacts, for only $290.
The updated corporate listing contains all 840+ member companies by market type, size, annual volume, geographic areas, types of equipment leased, lease products offered, and funding programs. The individual listing contains an alphabetical listing of 9400+ member contacts including full name, title, company, address, phone, fax, e-mail, business council affiliation and job function.
For a full description and to purchase the directory online, go to:
Remember that the most up-to-date directory can always be found online at:
Please contact firstname.lastname@example.org with any questions.
5. ELA's Principles of State Sales & Property Taxation Conference scheduled for September 17-18 . . . it's not too late to REGISTER!
It's not too late to register for ELA's Principles of State Sales & Property Taxation Conference, scheduled for September 17-18, 2002 at the Four Point's Hotel - Chicago O'Hare in Schiller Park, Illinois. This entry-level program is designed to assist the less experienced state tax professional acquire a better understanding of issues necessary for efficient tax planning and compliance. Whether you are a new company entering a single market or a national lessor with multi-state issues, this conference is a primary source of basic information you need to keep abreast of the changing landscape of state sales and property tax enforcement.
7. Join the growing list of corporate and individual donors to the Equipment Leasing and Finance Foundation!
The Foundation is in the homestretch of its annual fundraising campaign and your support would be greatly appreciated. Foundation contributors will be recognized during ELA's Annual Convention in October. Funds raised by the Foundation support ongoing research projects such as the Annual State of the Industry Report (to debut at the Convention), Annual Industry Future Council Report, Journal of Equipment Lease Financing and issue-related studies such as Leasing of Intellectual Property, The Securitization Marketplace, Leasing Strategies in the Semi-Conductor Industry and much more. Each of these studies will be available at the Convention or visit the Foundation website, www.leasefoundation.org. To help support these worthy endeavors, please contact Lisa Levine, Executive Director, at email@example.com, or 703-527-8655.
New Founders for 2002
Midwest Regional Association of Equipment Lessors
De Lagen Landen Financial Service
Republic Financial Corporation
Us Bancorp Piper Jaffray, Inc.
Wells Fargo Financial
Caterpillar Financial Services
First American Equipment Financial
Orix Financial Services, Inc.
Key Equipment Finance
Boston Financial & Equity Corp
Ober, Kahler, Grimes & Shriver
M & I First National Leasing Corp
Great American Leasing
Brentwood Credit Corporation
Hitachi Credit America
Sentry Financial Corp.
Summit Funding Group
Help & Profit Corp
Macrolease International Corp.
Canon Financial Services Inc
Ivanjack & Lambirth
Jenkens & Gilchrist Parker Chapin
Lombard/Royal Bank of Scotland
VGM Financial Service
Berkowitz, Lefkovits, Isom & Kushner
Groen, Lamm, Goldberg & Ruben
The Alta Group
Northern Consulting, LLC
Z Resource Group
Johnson & Johnson Financial Corp.
Rentech Financial Service Inc.
ABB Financial Services
D. Paul Nibarger
Edward A. Dahlka
Robert P. Rinek
Matthew D. Shieman
James H. Possehl
Many thanks to Foundation donors for 2002!
Amy J. Miller, ELA's Vice-President of Communications, edits ELT's E-leasing Newsletter. If you have questions or comments relating to ELT's E-Leasing Newsletter, please email her at firstname.lastname@example.org.
This newsletter is free to ELA members. Forward it to a co-worker!
Copyright 2002 by the Equipment Leasing Association
Phone: 703/527-8655 Fax: 703/527-2649
NEW YORK (Reuters/Washingon Post) - Former Tyco International Ltd. executives L. Dennis Kozlowski and Mark Swartz on Thursday afternoon pleaded not guilty to charges unveiled earlier in the day that they were behind an elaborate scheme to defraud the company and investors of some $600 million.
Also, Tyco's former general counsel, Mark Belnick,pleaded not guilty to charges he falsified documents to hide $14 million in loans to himself from the Bermuda-based manufacturing conglomerate.
Kozlowski, the ex-chief executive who is already facing a 14-count indictment for evading sales taxes on millions of dollars in art purchases, was released on a $100 million personal-recognizance bond, of which he must secure 10 percent, or $10 million, with his personal assets, within a week.
Swartz, former chief financial officer, was released on $50 million bail, and must secure with $5 million of his personal assets within a week. Belnick, meanwhile, was released on $1 million bail.
The three men, who were marched into the Manhattan courtroom in handcuffs, must return to court on Sept. 19.
Trading in the stock was halted this morning.
Manhattan District Attorney Robert M. Morgenthau today said the new Tyco charges indicate that the Securities and Exchange Commission and prosecutors are working together to punish a wave of corporate wrongdoing that has spooked investors and chilled the markets.
"These guys got away with this for a significant amount of time but they did get caught," he said. "I hope that there are a lot of corporate officials out there who aren't going to sleep so well tonight."
Also today, Tyco filed suit against Kozlowski, seeking hundreds of millions of dollars in damages, including repayment of five years' salary, benefits, loans and bonuses and payments made to other employees. The amount includes at least $20 million in personal expenses that, according to the suit, Kozlowski charged to the company. The company has already filed suit against Belnick, accusing him of failing to disclose $35 million in compensation and loans.
Morgenthau announced the new charges shortly after the SEC filed a companion civil suit against the former executives, saying they failed to disclose millions of dollars in loans taken from the company.
The 94-page indictment describes Kozlowski as "the boss" and Swartz as "chief of operations" of a criminal enterprise that manipulated Tyco's stock price through false public statements and fraudulent accounting entries. It also says Kozlowski and Swartz "concealed thefts and other wrongdoing by corrupting key employees with lucrative payments to influence their behavior."
Prosecutors also say Kozlowski and others sought to persuade a large securities brokerage to replace an analyst with an individual whom Kozlowski viewed as more friendly to Tyco. Kozlowski and the new analyst then allegedly "exchanged presents worth thousands of dollars."
At Morgenthau's request, a judge signed a temporary order freezing $600 million in assets belonging to Kozlowski and Swartz, Bloomberg News reported. In its civil suit, the SEC asks that Kozlowski, Swartz and Belnick be forced to repay all money received as a result of the alleged fraud, including loans, salary, bonuses, stock options and stock losses they avoided.
"Kozlowski, Swartz and Belnick treated Tyco as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors," SEC enforcement director Stephen M. Cutler said in a statement.
Morgenthau said he decided not to charge Tyco as a corporation because he felt it would be unfair to punish the firm's 270,000 employees for the deeds of a few. But both Morgenthau and SEC officials said the investigation was ongoing and could lead to new charges.
The theft charges allege that Kozlowski and Swartz abused two corporate loan programs -- one intended to help executives pay taxes on stock grants, the other to help them relocate to the New York area. While the loans were being made, Kozlowski and Swartz allegedly signed sworn documents saying they had no indebtedness to the company over $60,000.
Kozlowski and Swartz are also charged with fraudulently transferring $55 million from Tyco's sale of its ADT Automotive business to their own accounts.
Prosecutors also say Kozlowski committed fraud by publicly expressing confidence in Tyco's future while selling thousands of shares at prices inflated by the company's false financial reporting, making $280 million in the process. Swartz allegedly sold over 2 million shares worth $125 million.
By Len Pasquarelli and John Clayton
The Arizona Cardinals on Thursday afternoon reached a five-year contract agreement
with first-round defensive tackle Wendell Bryant, ending a long dispute and leaving just one unsigned draft choice.
The financial details of the agreement were not available.
"I'm glad the deal is done,'' coach Dave McGinnis said. "Now he'll get some of that damn good coachin' he's been missing.''
The accord between the two sides leaves only Minnesota Vikings first-round choice Bryant McKinnie, an offensive tackle from the University of Miami, unsigned among all drafted players. McKinnie has said he will sit out the '02 season rather than sign a below market contract.
Bryant, who turned 22 on Thursday, was the 12th overall choice in the draft. The former Wisconsin star appeared in 48 games and started 37 of them for the Badgers. He had 189 tackles and 24 sacks.
The Cardinals said Bryant would arrive in Phoenix in time to practice Friday. The Cardinals, who play at Seattle on Sunday, will request a two-game roster exemption for the addition.
Len Pasquarelli and John Clayton are senior NFL writers for ESPN.com. The Associated Press contributed to this report.
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