Swartz, Mark - Murderers and Rapists and Tyco's...

Murderers and Rapists and Tyco's Mark Swartz

by Katrina Brooker  August 13, 2007

“You gonna tell us about what’s in your cell?” It’s 3 a.m. and the guard looks angry. He is dressed in full riot gear—helmet, goggles, Kevlar vest—and is pulling at the leash of a German shepherd barking furiously at the inmate standing in front of him. Mark Swartz is naked, holding a dirty mattress that he hastily rolled up and now clutches to his chest. He isn’t sure how to answer.

It’s his second night in jail, and he doesn’t want trouble—or rather, any more trouble than he’s already got. He is just 36 hours into a prison term that could last 25 years. He’s in the Tombs, the Manhattan jail that is the first stop for most convicts on their way upstate. The day before, a fight broke out during breakfast, and the violence, up close, shook him—the anger and panic in the room had been palpable. The guards had been furious, pulling the men off one another and shouting at the rest of the inmates to get back into their cells. This predawn raid almost seems like retaliation by the guards, their way of making sure everyone remembers who’s in charge.

Initially, Swartz wasn’t worried when he saw the dog sniffing around—he knew he didn’t have any drugs—but now the shepherd is going wild, pawing frantically at something in the corner of his cell. The place has a funky smell, and the walls and floor are crusty with layers of paint, dirt, and, apparently, something the dog has been trained to find.

Swartz is wondering how much time a drug charge would add to his sentence when another inmate steps forward. “Hey, did you guys find crack?” The guards turn. “Because I saw who was in that cell last night, and he was acting crazy.” The guards gaze hard at the inmate, then at Swartz. They talk quietly for a few moments; then, without another word, the search is over. Swartz silently, gratefully, returns to his cell and remakes his bed. The guards turn off the lights and order everyone to go back to sleep.

Alone in the dark, Swartz suddenly ­notices the view from his barred ­window: a clear shot of the Brooklyn Bridge, its white lights glowing on the dark ripples of the East River. This is the last time, for a long time, that he will see anything so beautiful.

Mark Swartz used to be a lucky man. He was rich and powerful. At his pinnacle, he was worth roughly $150 million. But he illegally pocketed $50 mil­lion and got caught. Swartz used to be the chief financial officer of Tyco International, and the day he went to prison, two years ago, he was big news. ­Paparazzi chased him; his picture was on the front pages of newspapers around the world; his conviction and sentencing were the subject of countless news articles, TV shows, and blog posts. What made him famous wasn’t just the amount of money he stole; it was whom he stole it with: He helped his ex-boss, former Tyco C.E.O. Dennis Kozlowski, filch $110 million more for himself. Together they became the poster boys of everything that’s gone wrong in corporate America. Their trials, coming on the heels of the blowups of ­Enron and WorldCom, fueled the public’s outrage over the greed and deceit of the business elite.

When it came time to sentence Swartz, there was no question that the punishment would be severe. The days of slaps on the wrist and country-club prisons were over. Swartz got 8¹⁄3 to 25 years in the state pen. His counterpart at Enron, Andrew Fastow, got six years in federal prison. Jeffrey Skilling, the former C.E.O. of Enron, got 24 years.

Swartz is now bunking next to child molesters, rapists, and murderers. His sentence should serve as a warning to those who are tempted to take advantage of their power and prestige: This could be you. But the public has a short memory. Barely two years into his term, Swartz has faded from the headlines. In a short time, few people will remember his name, the details of his case, or even why he’s in prison or how long he’ll be there.

He has a pending appeal, which will be heard this fall, but he knows his chances of winning are slim: It would be pretty hard for any judge to justify letting the Tyco crooks go free. Instead, Swartz must adjust to life as prisoner No. 05A4823—for this is who he will probably be for a very long time.

“My second day in prison was probably the worst,” Swartz says one morning in the visitor’s room of the Oneida Correctional Facility in Rome, New York. In one corner, there’s a metal cage through which all visitors must pass. On one wall, inmates have painted a mural, a cheery scene of snowcapped mountains and ever­greens. There are about 30 tables with chairs. Each table is used by an inmate and his visitors, who sit next to him. Swartz sits at the table right in front of the guards’ desk; the guards always place him there because he’s in protective custody. Wearing green prison-issue pants and yellow work boots, he doesn’t look much different from the other inmates, except that he appears to be older than most. He is 47 but looks 57: His angular face is weathered and deeply lined, and he has a long, thin nose and a mop of curly brown hair. As he speaks, though, his expression becomes animated. It’s clear he enjoys having an audience for his stories.

“I was on the bus, chained up to the other inmates, when this guy behind me said, ‘Gimme your watch.’ ” Swartz’s voice drops to a growl, and he tries without much success to make a fierce face. “I’m kind of frozen, because before going into prison, I talked to some guys who’d spent some time inside. Their advice was ‘Don’t ever back down.’ So I knew there’s no way I’m giving this guy my watch. Then the guy says again, ‘Gimme the watch,’ and he looks like he’s getting mad. Now everyone on the bus is freaking out. We’re all chained together, and the guy next to me keeps saying, ‘Just give him the watch!’ I think he was more scared than I was. I’m trying to think of how to get out of this—who knows if this watch guy is going to be my cellmate later on?—so I changed the subject. I said, ‘Hey, any of you guys been in jail before? ’Cause this is my first time, and I’m not really sure of what I’m doing.’ Everyone started talking about Rikers”—a New York City jail complex located on an island in the East River—“and other places they’d been to, and by the end of our ride—I don’t want to say we were friends, but the guy who wanted my watch said, ‘You’re okay,’ and told me to look him up if we ended up in the same prison.” Swartz rolls his eyes and grins widely. “Now I’m thinking, If this is just Day 2 of my sentence, it’s going to be a long 25 years.”

As Swartz talks, it’s sometimes easy to forget that he’s talking about himself, or even that he’s in prison. He describes scenes as though he’s an outside observer of a strange and violent world. He seems relaxed and upbeat, and he shows his wry sense of humor. After describing the full-body strip searches he routinely endures, he says, “I feel sorry for the guards when they ask me to bend over. I wouldn’t want to look at that, let alone put my fingers there, even with gloves on.” As he’s talking, two guards walk over to a nearby table where a prisoner and his girlfriend are sitting. Suddenly, the guards take hold of the inmate and lead him away. Swartz later recounts what he learned through the prison rumor mill: The woman had brought in a balloon filled with drugs, which the inmate had swallowed. Swartz adds, “I’m a little worried about telling all these stories. I just don’t want to say anything that might make me out to be a snitch. That could make my life here really difficult.” He looks scared.

Swartz began serving his term at the Downstate Correctional Facility, a maximum-security prison in Fishkill, New York. He was kept in protective custody because his wealth and high profile made him a target for other inmates. No one there remembered the details of his case, but everyone seemed to know he was somebody big. One guard, who had Swartz mixed up with Enron’s Jeff Skilling, told him, “I can’t believe you’re the guy who put all those people on the unemployment line.” Swartz told him, “That’s not me—I’m the Tyco guy.” The guard Googled Tyco and later told Swartz that he was “not such a bad guy” and then asked whether he should buy Tyco stock for his I.R.A.  (Unlike Enron, Tyco never went out of business. At the end of June, its stock was up 25 percent from a year ago, and its current management recently split the company into three parts.)

Swartz says he has never been physically threatened, but he knows that the danger is always there. Once, in the prison yard, a man in solitary confinement shouted through his window slat for someone to point out Swartz to him. A fellow inmate helped Swartz by shouting back that he wasn’t in the yard that day.

Last May, Swartz was transferred to Oneida, a medium-security prison that’s a lot safer than Downstate. He’s still in protective custody; he sleeps alone in a 9-by-13-foot cell, which he is allowed to leave only for one hour of recreation during the day and again in the evening for his shift as night janitor. Of the 20 or so other inmates in protective custody, most are child molesters. Though Swartz is cautious, keeping mostly to himself, he has made a few friends. Swartz and his friends talk mainly about their lives on the outside and what they’ll do when they get out—tough subjects for Swartz, since most of the inmates on his cell block will be getting out long before he does. Many of the child molesters are in for three or four years; there is a rapist who’s in for five to 15. The only guys he’s met during his time in prison who are serving sentences longer than his are in for killing people. With good behavior and a friendly parole board, Swartz believes he could get out by 2012, when he’s around 52. “I try not to think about it,” he says quietly.

Fifteen hundred miles away, in Florida, Karen Swartz is cooking dinner. Bon Jovi’s “Bed of Roses” is playing in the background. Karen’s not much of a chef, and this is her first attempt to use the slow cooker her daughter-in-law gave her for Christmas. She has thrown some beef and vegetables into the pot and is hoping to have a palatable stew by the time her kids show up for dinner, as they do most Friday nights. The kitchen is bright, open, and massive. Its windows overlook a lush, well-manicured garden; beyond that is the Intracoastal Waterway. Outside, a warm breeze blows through the trees and stirs ripples on the pool. Peering down at the brownish-green mush in the pot, Karen sniffs, smiles, and says, “I’m a terrible cook.” A few hours later, after checking the stew again, she says, “Maybe we’ll just order.”

Karen looks a lot like the soccer mom she’s become—no makeup, sensible haircut, old jeans. During Mark’s trials, aNew York Timesarticle titled “The Wifely Art of Standing By” described her as a “model” courtroom wife: “She smiles politely and dresses in the kind of suit a first lady might choose.” Still, she has an edge—she speaks bluntly and has strong opinions. Of her husband’s conviction, she says flatly, “He was railroaded.” When asked about how life has changed since Mark’s been locked up, she says, “Well, the prison doesn’t allow conjugal visits, so it’s definitely a dry spell here!”

Karen says the first time she visited her husband was the worst. When she saw him walk in wearing a prison jumpsuit, it hit her hard that the life they’d spent nearly 30 years building together was over. She broke down, the only time she’s cried since her husband’s troubles started. She soon realized that she needed to build a new life with him, one that meant spendingherdays in a prison too.

Life as a prison wife has taken some getting used to. Karen once saw an inmate punch his girlfriend. She’s learned how visitors smuggle cocaine into prison: Liquefy it, soak a Kleenex in it, and pretend to use the tissue to blow your nose. Then there are the rules of dress. At Downstate, under­wire bras are banned—they can be used to make shanks—as are miniskirts, plunging necklines, and anything else that shows too much skin or might arouse the inmates.

Karen sees her husband once a month; each visit is about six hours long. She also speaks to Mark on the phone every night. He calls collect, racking up a $750-a-month phone bill. They talk about their kids and friends, and about celebrities; they both readUs WeeklyandStarmagazine and avidly follow the gossip about Brangelina, Britney, and Paris. They talk about piano; Mark is learning to play on a keyboard in his cell; Karen plays a Baldwin baby grand in her living room. He keeps her up-to-date on such prison gossip as which inmates have married women they’ve met through classified ads in magazines. Karen describes the latest movies she’s seen and family vacations she’s planning. Sometimes they fight. Sometimes they talk about his appeal; both of them have decided it’s better to assume that they won’t win.

A few months ago, Mark told Karen to throw away all the clothes and other ­personal items he’d left at home. “I couldn’t do it,” she says. “That’s like when someone dies. But he’s not dead.”

Mark Swartz is the son of second-generation Polish and Russian Jews. (About 20 members of his family died at Auschwitz.) He grew up in a middle-class home; his father was an accountant and his mother a homemaker. He met Karen during freshman orientation at the University of California–San Diego, in 1978, and they married two years later. When he graduated—with a major in political science—he began working as an auditor at Deloitte & Touche. The Swartzes were not rich. One photograph from 1984 shows Mark and Karen’s first home, a white ranch house in San Diego with a dirt lawn; they could not afford landscaping. Over the next five years, they had three kids—Scott, Eric, and Andrea. They appeared to have been an ordinary—even dull—suburban American family. Then, in 1991, Swartz took a job at Tyco and met Dennis Kozlowski.

The 10 years that Swartz worked under Kozlowski were some of the best of his life. When Swartz joined Tyco, he was an assistant controller making $45,000 a year. The company was smaller back then; it had $3 billion in revenue, four divisions, and a two-story headquarters in Exeter, New Hampshire. But under Kozlowski, who became C.E.O. in 1992, Tyco went through an extraordinary transformation. In that decade, Kozlowski grew the company into a $36 billion-a-year conglomerate with five divisions worldwide. He was a bold and aggressive dealmaker: At one point Tyco was averaging 200 acquisitions a year. As Tyco’s C.F.O., Swartz was a perfect foil for Kozlowski. While his boss was the big-picture, big-idea guy, Swartz was the details guy who tied up the million loose ends.

Swartz loved his job. He traveled all over the world, the deals he was working on made headlines, and he had real power. He also had real money. He got his first major bonus—$2 million—in 1995, and after that, the cash poured in. For the most part, though, he kept out of the spotlight. His name rarely appeared in the press, other than in short articles about the company’s accounting and finances.

The biggest profile of him was a piece in the October 2000 issue ofCFOmagazine, which credited Swartz with helping create Tyco’s “tightly structured acquisition approach.”

Unlike his oversize boss, Swartz didn’t throw big parties, collect art, get divorced, or marry a younger woman. He spent most of his time outside of work with his wife and kids—Saturday was usually devoted to swim meets or ball games, followed by pizza at the kitchen counter. He once got into an argument with Kozlowski over taking an afternoon off to go to his daughter’s volleyball game. He says Kozlowski threatened to fire him if he didn’t come back in to work on a deal. Swartz stayed at the game and made up with Kozlowski later.

The unraveling of his old, happy life started with a canceled family vacation. Karen recalls, “I remember we were ­going on this cruise to celebrate my son’s graduation, and we’re walking out the door, and Mark said, ‘I can’t come.’ ” “He said, ‘All this stuff’s going on at work.’ And I said, ‘Well, what?’ And that was how I first heard about it.”

That was the summer of 2002; Koz­lowski, who was under investigation for not paying sales tax on some paintings, had just resigned. Three months later, Swartz and his ex-boss were indicted on more than 30 counts, including conspiracy, grand larceny, enterprise corruption, and falsifying business records.

During their trials, as in their business lives, Swartz took a backseat to the boss. Kozlowski was the guy who threw his wife a $2 million birthday party in Sardinia, complete with a nude male ice sculpture spewing vodka from its penis and a cake shaped like a naked woman. These details, along with Koz­lowski’s $6,000 shower curtain and $15,000 umbrella stand, became the defining excesses of the Tyco case. At one point during the trials, friends told Swartz that investigators were asking about women he’d slept with, looking for anyone who could prove he’d had an affair. No one ever surfaced. Swartz says, “The one good thing about it was that Karen knows I never cheated on her.”

What ultimately got Swartz sent to prison had nothing to do with decadent parties or the extravagant shopping sprees of his ex-boss. His case boiled down to this: Between 1999 and 2001, Swartz personally stole $50 million in il­legal bonuses and helped Kozlowski loot the company for more than $150 mil­lion. To this day, Swartz maintains that those bonuses had been authorized by Tyco’s board. But no records of these discussions exist, and during the trials, six Tyco directors testified that they never authorized any such payments. “The thing I regret the most,” Swartz says, “is that I never recorded the conversations I had with certain members of the board.”

The morning after his conviction, Swartz woke up sure he’d dreamed everything—the indictment, the trials, the verdict. “I remember feeling relief, like, Thank Godthatwasn’t real,” he recalls. That feeling didn’t last. What hit him first was not the dread of prison but the fact that, for the first time in as long as he could remember, he had nothing hehadto do. He’d spent the past three years in and out of lawyers’ offices and courtrooms. Now it was over, and suddenly he was completely—if temporarily—free. He had three months to go before his sentencing—which, he says, was a bit like knowing you’ve got three months to live, with the health to enjoy it and plenty of money to do whatever you want. He still had everything he’d earned legally, as well as $50 million in severance and other deferred compensation from Tyco. He still had his homes—one in Florida, two beach houses in New Hampshire, and a farm in Virginia. Given all those resources and options, all he really wanted to do was spend as much time as possible with his family.

That summer he drove cross-country with his two sons and his older son’s fiancée; all three men shaved their heads in an act of solidarity. They went white­-water rafting in New Mexico. They drove to California to meet up with Karen and the Swartzes’ daughter, then dropped the younger son off at his college in Arizona. Of course, the shadow of his sentencing hearing was always there. Mark once asked Karen if she thought he should take classes to learn how to defend himself in prison. They briefly discussed martial arts lessons. “Then we realized that anyone who’d be attacking him would have a lot more experience in that kind of thing,” Karen says. “So we decided he’d be better off just being himself and doing what he’s always done: trying to talk things out.”

He spent the night before his sentencing with Karen at the Peninsula hotel in Manhattan. They had tea at the hotel, took a long walk through the city, and then brought pizza back to their room. Both had prepared themselves for a stiff sentence, but they still hoped that he would remain free on bail while appealing his conviction. When he’d left his home in Florida to come to New York for his sentencing, he hadn’t bothered to clean up his desk; he’d imagined that he’d be back in a few days. Now that desk, untouched since the day he left, is like a strange time capsule. There is a refund for a canceled Hawaiian cruise booked for July 2002, two months before his indictment; his daughter’s certificate for outstanding achievement in middle school swimming, dated May 15, 2003, shortly before the beginning of his first trial; a crisp playbill forForbidden ­Broadwayfrom December 2004, a few weeks before his second trial began; and a note Swartz faxed to his mother-in-law promising that the money she put up for his bail (his accounts were frozen) would soon be returned to her.

“I’m sorry I said that, Dad,” says Scott Swartz. He’s sitting next to his father in Oneida’s visitors room. He’s come to spend the weekend nearby while on a break from his studies at the University of Miami’s business school. Scott tries to visit at least every other month and speaks to his father on the telephone several times a week. Scott and Mark usually have fun during their visits, or as much fun as you can have in the prison’s visitor’s room. They eat Twinkies from the vending machine and rib each other. On this day, however, father and son are having a tense conversation. They are talking about Mark’s case, which is something they don’t normally do.

“I wish I’d told you to take [a deal],” Scott says. Four years ago, Mark had asked his family for advice: Should he negotiate a plea bargain in exchange for testifying against Kozlowski? Although no specific terms were ever discussed with the D.A.’s office, Mark knew this would be the fastest way out of his legal troubles. But when Mark broached the idea with members of his family, they were clear: no deal. This was back before his trials began, when it still seemed possible that a jury would find him not guilty. What’s more, the family agreed that if he testified against Kozlowski, he’d be sending an innocent man to prison.

“We discussed this. Remember?” Mark says to Scott shakily. He seems stunned by his son’s new take. It’s the first time he’s heard Scott talk like this. He looks crestfallen, as if he’s only now realizing the full impact his incarceration is having on his son.

“We all said it was the right thing to do,” Mark insists, but he looks uncertain, desperate. Scott tilts his chair back awkwardly and then says quietly, “I know, Dad, but obviously it wasn’t. I mean, look where you are now.” To this, Mark Swartz has no response.

http://upstart.bizjournals.com/executives/features/2007/08/13/Tyco-Mark-Swartz.html