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. Last Updated: 07/27/2016

New Charges Brought Against Ex-Tyco Head

NEW YORK -- L. Dennis Kozlowski, the former chairman and chief executive of Tyco International, has been indicted on two new charges of tampering with evidence in the case that accuses him of evading more than $1 million of sales taxes on six paintings that he bought last fall.

Kozlowski pleaded not guilty to the new charges. He had already been accused in a 12-count indictment of trying to avoid paying New York sales taxes by shipping empty painting crates to Tyco's headquarters in Exeter, New Hampshire, and then transporting the paintings between New Hampshire and Manhattan.

The new indictment contends that Kozlowski removed a fraudulent bill of lading, or cargo document, from a file of papers kept at Tyco's offices in Boca Raton, Florida, before turning the file over to the Manhattan district attorney's office. Investigators had requested the complete file last month.

The bill of lading, which is dated Jan. 2, 2002, falsely reflected the shipping from New York and the receipt in New Hampshire of five paintings, including a Monet and a Renoir, prosecutors said.

The accusations against Kozlowski have prompted an internal investigation into the finances at Tyco, whose share price has plummeted more than 80 percent this year.

To bolster its balance sheet, Tyco plans to spin off its finance unit, CIT Group, in an initial offering Tuesday. Executives close to the company said they planned to price the offering on Monday at $5 billion to $5.8 billion, or $25 to $29 a share.

Kozlowski looked flushed Wednesday when he appeared for arraignment in a crowded, hot and muggy Manhattan courtroom before Justice Michael Obus.

He uttered one sentence: "I plead not guilty to the indictment." He was released on the same $3 million bail posted after his last arraignment.

Conviction on a charge of tampering with physical evidence is a felony, carrying a penalty of four years in prison. Kozlowski already faces a possibility of up to four years in prison for each of the 12 counts in his previous indictment, to which he pleaded not guilty on June 4.

Prosecutors and Tyco are separately investigating whether Kozlowski used company loans and money to buy artwork and whether company money was used to buy his apartment in New York and possibly one of his homes in Florida. Tyco's own internal inquiry has already led to lawsuits against Mark Belnick, its former general counsel, and Frank Walsh Jr., its former lead independent director, contending in separate cases that the men wrongly took millions of dollars from the company with the help of Kozlowski.

Once outside the stifling courtroom, Kozlowski smiled and refused to answer the questions of a crowd of reporters.

His lawyer, Stephen Kaufman, said, "It is our view that the charges are unsubstantiated and unproven."

But as the reporters continued to pepper Kozlowski with questions, he opened up a little bit. "I'm spending my time with family and friends," he said when asked what he had been doing.

As Kozlowski entered an elevator with several of the reporters, the questioning continued. As he appeared about to speak, Kaufman interrupted, saying, "I've advised him not to make any statements."