Catherine neal is next on booktv. She talkedabout the rise and fall of tycos Dennis Kozlowski. Catherine neal had access to kozlowski and the District Attorney who prosecuted him. Yard use all the people directly involved in the case and the media that reported on it acted unethically at some point. This is about an hour and ten minutes. [applause] one of the greatest adventures in my life began three years ago when i did something outside my comfort zone. At the time it seemed like a very small and insignificant act but it turned into something really, really important and significant. My adventure has taken me to places i have never been like a hard core new york state prison and a swanky wall street law firm where president Franklin Delano roosevelt once practiced law. I have been to a corner cafe in new york city where i met and interviewed a stranger i tracked down on facebook. I have learned more than i ever thought i was capable of learning. I have met people i never would have matched and i have gone to do really lot of fun things like being here tonight and this is such an honor for me on my campus with my colleagues and students and former students. Is a real pleasure to be here and i am thrilled to be here. These things happened to me because i did one small thing. I asked a question. Have you ever found yourself in a situation where you dont know what to do next . You have questions but you dont have answers. This could be when your boss gives you a project that you are responsible to complete and you are not sure what to do work and a sign in your professors gives you and you are a little lost and not sure what the first step should be or the next step should be. Anyone ever been in that situation, dont know what to do . I have been there many times. Why is it so difficult for us to ask questions . Anyone else other than me . I hate to ask questions and i hate to ask for help and i am not sure why. I dont know if it is because of selfesteem problems in that i dont think i am worthy of someone elses time. When you ask for help and ask questions of other people you are asking for their most valuable resources, their time, their knowledge, their skill. It feels like an imposition. I dont know if that is why i and others have a difficult time asking questions and asking for help. I dont know if it is because we feel the need to be polite and it feels impolite to ask others to help us when we are having difficulty. And sometimes i wonder if it might be arrogance. You heard the old baggage you want something done right doityourself. So we think we can figure it out all by ourselves and we dont need anybody elses help. And i am right there, probably one of the worst offenders in this category. I dont like to ask for help and i rarely do it but in this case i did reach out and asked a simple question and it led to the largest and most significant accomplishment in my professional career thus far. It is work that i am proud of and thrilled that i have had a chance to work on and move forward. Kerri important goal in my career, very enriching experience. Have you ever had a goal, but you dont know how to get there . That is the situation we have all found ourselves in in small ways or large waste in our lives and our careers and sometimes when we get there it can be paralyzing you dont know what to do next so you stop. Is easy to resort to the scarlet ohara method of problem solving. We stopped, wonder how many great ideas end at this stage, a great idea but you dont know what to do with it, dont know what to do next. So what i learned over the past three years through the process of researching and writing my book are valuable lessons that are applicable in usable by everyone in helping get you to the goals you set for yourself in achieving what you want to achieve. I want to share what we learned about asking questions, how to ask, when to ask, who to ask and i will share that as i tell you about the process of writing my book taking down the lion the triumphant rise and tragic fall of tycos Dennis Kozlowski. I started working on this project because i had some nagging questions about a case study in my Business Ethics course. I have been teaching case study about the Tyco International corporate scandal since fall 2005 when i began. Was my first semester, talked about the title International Corporate scandal. At the time the criminal trial related to that scandal had just ended in the summer and the executives who were charged and convicted had yet to be sentenced so i had been talking about this case from the beginning. For anyone in this room who is a former student of mine you know i often had students present the case studies in our classes, not because i am lazy. It is good for you to do that. And for a few years i had students presenting the tyco corporate scandal case study in this case study really focuses on the former ceo of tyco, a man by the name of Dennis Kozlowski. The students went to present a case study, do a great job. I would find myself every semester spending 30 or 40 minutes after students presented saying i dont really understand this case. With the fact that were available in the textbook and other resources i kept looking at it and looking at it and with other Major Corporate scandals i could make sense of where the bad decisions were made to, where the crimes were committed. Much easier to understand better in the tyco scandal i couldnt make sense of it. Just didnt make sense to me please eventually because i found myself explaining that i didnt understand it when the student groups presented a case study i decided to take the case study back and do it myself every semester so i could say i dont understand it instead of telling students that they dont understand it. This is a case that nagged at me for many years. Little background about the case. Tyco international began as a small New Hampshire company in 1960 doing some and glamorous types of work like electronics. Anyone in the room in these areas of business or industry, electronics, pipes, valves, eventually they acquire some brands like adt Security Systems is the most wellknown tyco subsidiary. The company was a Small Company that grew from its beginnings, and there was a man who became the ceo and he was the most closely associated person with the Tyco International. You might have heard of Dennis Kozlowski. He has been covered broadly by the media. If you know him you probably are most familiar with the fact that he bought a 6,000 shower curtain and he threw a 2 Million Birthday Party for his then wife for her 40th birth day just off of italy. He flew Jimmy Buffett to the party. 250,000 if you guys and looking into that. So these are the fact most people know about Dennis Kozlowski but there are more significant facts that help us better understand what happened in this case. Kozlowski grew up in a modest background, went to newark, new jersey, his parents did not have a college education, neither his mother nor his father. He was a firstgeneration college graduate. He grew up in a four room apartment, he shared a bedroom with his two younger sisters, they shared a bed and slept on the cost, he worked from the time he was a child delivering newspapers and worked throughout his life, never stopped working until he was in prison but then he worked in prison with different kinds of jobs. He went to college at seton hall university, he lived at home with his parents would some of our students here can relate to. Lived with his parents, paid his own way through college, worked in a pharmacy and played guitar in a band for several years and that is how he paid his College Expenses including room and board to his parents. And he graduated with a bachelors degree in accounting in 1968. Sounds like he intended to have a career in business, but he really did not want a career in business, he wanted to be a pilot. You wanted to fly jets in the military in vietnam, 1968 when he graduated from college the United States was involved in the war in vietnam. Kozlowski tried to join all of the arms of the military and he was turned down by all of them for a variety of reasons, to be a pilot in the air force and navy. His eyesight wasnt good enough, the army wouldnt taken because of flat feet. So he was trying to get into the military during a war and they wouldnt take him. He went to arizona to do pilot training. He did that for almost a year. When he figured out he would never getting to the military, and wasnt going to go to viet nam and fly jets he decided he did not want to be a commercial pilot as a career. He drove back across the country, back to his parentss home in newark, moved back in with them and looked for a job. He had a couple jobs in new york city with companies you might have heard of, smith corona for those of you who remember what a typewriter is, and in 1975 when he was 28 years old head hunter came looking for him and told about a Company Called skykomish at tyco. The interview with the ceo of tyco and he remembered what his starting salary was because the ceo said his salary by his age. He was 28 years old so he was paid 28,000. I dont know what kind of formula that is that that is what he used so he started with tyco at the lowest level and worked his way up the ranks. According to everyone i spoke with he was the hardest working guy in the company. One of these people who literally work 18 hour days, six seven days a week for decades. He was very successful and ultimately in 1989 was named chief operating officer, was given a spot on the board of directors and in 1992 was named ceo of Tyco International. When kozlowski joined the company in 1975 tyco had annual revenue of 19 million. By the time he finished his decade as ceo in 2002 the company had 40 billion in annual revenue and most of that growth happened under his leadership. So he was known as a very successful manager. Started receiving a lot of media attention, attention from analysts, people on the street, was known as a very aggressive ceo because one of the ways that he grew the company was by acquiring other companies and he did so aggressively and frequently in. During the ten years he was ceo he acquired about a thousand companies and when i was researching the book looked to see if there is anyone who has much direct experience with mergers and acquisitions and i couldnt find anyone. He was directly involved in all of those acquisitions. He was known as a brilliant acquirer. He had a gift for partying, the right companies, seeing if he could bring them into tyco and provide more value for shareholders. The media loved him. Cover of a magazine, business week and he was on business week again in january of 2002. This is significant because january of 2002, holding him up as one of the top managers in the country, managers to watch. Unfortunately for tyco and kozlowski the great decade they had under kozlowskis leadership ended birdy abruptly. If you remember, the 1990s, the strongest economy in history for almost a decade. To his benefit was the decade he was the ceo. The got to run and grow the company during an economic boom. A recession hit the United States in 2001, and tyco suffered not as badly as other companies but suffered severe the. Then we had a terrorist attacks in september of 2001 and that was a devastating blow to the economy as well. On top of this there was a wave of highprofile corporate scandals that began at the end of 2001, began when enron declared bankruptcy and that the time it was largest bankruptcy in history. I dont know if you remember the story of enron but accounting fraud, tens of thousands of employees lost their jobs, tens of thousands of retirees lost their entire pension in a few days time. People were angry, upset, suspicious of large corporations and their leaders. After and wrong, surely following enron was world, declaring bankruptcy surpassing the size of enrons bankruptcy, global crossings declared bankruptcy in the same time frame. Martha stewart faced criminal charges in this same six months period. So the environment was hostile for large corporations and their leaders and especially for corporations that had experienced a very rapid growth as tight had tyco had. There was extra scrutiny for a company like tyco. On top of the problemstyco they had just made it 10 billion acquisition in mid 2001 and because of all the problems with the economy and corporate scandals their Credit Rating dropped, acquisition was going very poorly and kozlowski had a stellar record of having them go well, very successful. This was going badly, they knew they would have to spin off the company. Shareholders are not happy about that. There began to the internal disagreements between members of the board of directors, between the board of directors and management. I strongly believe things had been going well, the stock price was up instead of down those disagreements would not have happened but when people are under pressure it tends to be some conflict. As i said the price of tycos stock was down for the first time in a long time and there had been a great decade. Everyone was happy. Under kozlowskis leadership tyco experience 40 consecutive quarters of significant growth. Everyone is happy and everyone thought kozlowski could do no wrong and the board of directors said please keep doing what you are doing. Is perfect storm of 2002 that ended abruptly and the big blow for kozlowski happened in june of 2002 when he was charged smith be evading sales tax on the purchase of some pieces of art. This was not connected to kozlowski. These were personal purchases of art. In new york city if you buy goods outside the city and bringing them into the city you have to pay an 8 sales tax or use tax. The manhattan District Attorney, prosecutor in new york city found out many people were buying expensive art outside the city, bring it in but failing to pay that salestax. So they were watching calories and large purchases and happened to see a purchase where the sales tax wasnt paid and saw the name Dennis Kozlowski, a name a prosecutor recognized. This was someone who had been on magazine covers, had a big presence in new york city so the man henry d. A broad sales tax evasion charges against kozlowski. Think about when you make a purchase. Do you submit sales tax to the state . Personally for everything you buy . The vendor collect and submits to the taxing authority. Isnt that the normal way we do it. You are told what the Purchase Price is, you pay it and assumes sales taxes get submitted to the state. That is what kozlowski thought about his art. He thought he paid the Purchase Price to the gallery, and the arts agency was using submitted the sales tax when in fact the salestax was never submitted. It would have been the obvious thing to do would be put in manhattan d. A. To charge the agent or the gallery but he gave them immunity and instead went after the highprofile chairman and ceo of the large multinational corporation. Little known fact almost everyone who knows something about this case believes Dennis Kozlowski is in prison for evading taxes. Not true. These charges were dropped by a judge later. There is no crime in new york for a consumer failing to pay sales tax so the prosecutors overstepped a bit, in the indictment, charges related dropped. For kozlowski the damage was already done. Things are not going well so as soon as he informed the board of directors he was going to be indicted they found out on friday, he called all the directors individually over the weekend and said i am going to be indicted because he is the ceo of refuge publicly traded corporation has a duty to report to the board of directors even though it is not connected to the company, his personal life is of interest to his shareholders. They fired him the day before he was indicted, like that. No innocent until proven guilty. He was out. Shortly after he was out, the company hired an attorney to come in and perform an internal investigation. In a very short number of weeks this private attorney in conjunction with the manhattan d. A. Found evidence of some very serious crimes at tyco involving the ceo and the cfo, marc schwartz. The most serious of those crimes was grand larceny. Dennis kozlowski was accused and convicted of stealing about 100 million from tyco. Most of that was in the form of bonuses. Kozlowski was and to this day continues to be a very strong believer in pay for performance. He thinks the best way to motivate people is incentive pay. Incentive pay with no caps. You can make as much depending on your performance. That is how he paid people in the company and that is how he was paid. There were a few consecutive years where kozlowski was making more than one hundred Million Dollars a year. That is a lot of money. Of that amount about 1 million with his base salary was all that was guaranteed. The rest of that was all paid because of the pay for performance programs in the company. There was a written policy about how bonuses would be calculated. These four bonuses you was convicted of stealing were all mathematically correct. The amounts were correct. The problem was the board of directors was supposed to approve those bonuses before they ever paid to the executive and there was no documentation of approval of the board and directors got on the stand during the trial and said he didnt recall approving the bonuses or they infected not approve the buses and that is how kozlowski and Mark Schwartz, the former ceo were convicted. The media that one of the kozlowski as the ceo turned on him very quickly. New york city is the largest media market in the world and they look for stories and they turned on kozlowski critic quickly and he was called all kinds of derogatory names like pig, dennis the menace which is an obvious one and he really became the face of corporate greed, the face of everything that was wrong with corporate america, overpaid executives, for decisions of the making, unethical behavior, it was all attached to his face. The two trials. Kozlowski and ford. The first was a mistrial after six months, second trial lasted five months. The conclusion of which they were convicted of 22 of 23 felony counts against them and they were both sentenced to 25 years. 81 325 years and a hardcore state prison, not in use sometimes hear of club fed, federal prisons where whitecollar criminals serve chyme time. I dont know how federal prosecutor feels about that but i have been to the prison where kozlowski serves time and i saw no Tennis Courts or swimming pools or anything. It was very presenty. Talked about this case to my students, we have case studies a lot in Business Ethics for a simple reason. We look at the mistakes of others have made and learn from them so the we dont make and in the future. This case i kept trying to figure out what students should be taking away from the case, what kozlowski did and what Mark Schwartz did so they would not repeat the same mistakes and end up in prison. My Worst Nightmare is seeing one of my former Business Ethics to inspect it on the newspaper mug shot because they went to prison for unethical behavior. I am sure that will never happen. So i had some questions that made this case confusing to me. Big ones. In almost every corporate scandal at that time to this day, the charges are almost always brought by federal prosecutors. Our steamed president used to be. In their tribe and federal court, it is federal law. Take a look at it. It is highly unusual for the charges to be brought by a local District Attorney which is what happened in this case. 9 news that u. S. Attorneys investigated tyco and Dennis Kozlowski. Federal authorities declined to charge anyone. They didnt see any crimes. Then the local they a step in and comes up with this huge indictment. The original indictment was about 90 pages and it read like the script of the Television Show law and order. It was very dramatic. The first 50 pages were charges that with the new york state equivalent of rico charges, they accused kozlowski and schwartz of running a criminal enterprise out of the corporate offices. Those charges were dropped before trial but makes for a dramatic indictment certainly, good reading. Interestingly that man had in d a 2 charged kozlowski and schwartz, Robert Morganfall was manhattan d. A. From 1974 until retired at the age of 90 in 2009 and he in fact was the inspiration for the Television Show law and order so it makes sense that the indictment reads like that. That was confusing to me. The evidence was confusing to me because nothing was hidden. The evidence they used against kozlowski was all taken from the books and records of Tyco International all of which had been audited by Price Waterhouse coopers, whatever the most respected Accounting Firms in the world. So it is interesting you are presenting evidence prosecution was presenting evidence and the defense would have used the same evidence. Nothing was hidden. There was no second set of books, theyre not told to lie or hide anything so peculiar circumstances. Another big difference is that tyco remained a strong company. And ron went bankrupt, worldcom went bankrupt, Kozlowski Tyco in other main strong and remains strong to the state. Employees didnt lose jobs, no one lost pensions. Different circumstance that made this case stands out at me. These questions in agony for a number of years. January 2011 my was in my office on campus putting my syllabus together for the Spring Semester thinking about this case study and i really wish i could figure out what happened here so i was clear the board that day in my office so the most random thing, i thought i would love to ask Dennis Kozlowski what really happened so i got on line, you can find anything you want online, any piece of information is out there somewhere. Looked to see if i could find an address for him and i found the address for a prison in upstate new york where he was at the time so i put together a simple letter, sent it is at address and just asked him if he would answer my question. Pretty straight forward, what happened . That is what i said to him, what happened . Stuck it in the mail and didnt think about it again. I didnt know who was the correct address or if he would open an unsolicited piece of mail or ever see it, put it in the mail and didnt think about it. Tweet weeks later i walked into our Department Office and our academic coordinator comment and said you have got a letter from a prison in your mail box. So i went in. It was a handwritten envelope with a handwritten one page letter from Dennis Kozlowski saying yes, i will answer your question and in my letter i offered to do it over the telephone or through email. He informed me that he didnt have those luxuries as a prisoner of the state of new york so he had to all communications through handwritten letters of for several months that is what i did. I sent him letters asking questions and he hands rose answers and send some back to me. It became burdensome for him since he had to hand write his whole life history of request and i asked him so after several months he said if you can travel why dont you come up to the president we can cover a lot more ground facetoface. Cell i did. I went to the prison, which was quite an experience in this process and it was one of those experiences that new york, in the middle of nowhere, near the ear canal, you have to get their real yearly in the morning, for me 6 30 is really early in the morning, and it is very foggy and you see the first picture on the top lefthand side . Is a long treelined lane, foggy, like driving into a horror movie. You know that part of the movie where you think who would go in there . Why would they do that. That is what i felt like, who would go in here . Start driving down the lane and you see the razor wire and guard towers and being processed in, hearing the gates clanged shut behind me which is that new feeling for me going in as the visitor, disconcerting because those big gates clanged shut behind me. Quintin, before i went in the first cheekily have visitors on the weekend, saturday and sunday so he set aside a whole weekend for me, seven hour saturday, seven hours sunday. Didnt have any of his other friends or family visit that weekend and set aside just for me. I wasnt allowed to take any notes in, no paper, no pencil. This is my only shot to get all the information i want from this guy. I studied for that visit like i was studying for the bar exam. Because i couldnt have any notes and needed to know the case very very well. Needed to remember the questions i wanted to ask off the top of my head. I sat seven hours on saturday, got in my car, headed digital recorder and recorded everything i could remember the we talked about. I dont know if you remember the last time you had a seven our conversation with someone and interrupted, facetoface, seven hours and interrupted. You can cover a lot of ground in seven hours of uninterrupted conversation so it was hard to remember everything we talked about in those hours but as we talked it was actually kozlowski his suggestion i might want to write a book. No one had written a book. There had been several books about the Major Corporate scandals, and wrong, theres a book called the smartest guys in the room which you may have read or seen a documentary that was made based on that book but no one had written the case, a book about kozlowski or the tyco scandal. He had been approached by people never agreed to cooperate with, they agreed to cooperate with me. This is the first big question i asked, he agreed which is shocking to me. Why would he agree to work with me . Some i began researching, in my kitchen. I wrote the book at my kitchen table. My house became covered with all things tyco. For a yearandahalf every surface was covered with all things tyco. At the scene the movie a Beautiful Mind . Some days i would sit down, didnt change out of my pajamas for two three days in a row. It was a bit frightening especially for my family had to survive that. Really got into it and because i know he is controversial my research was meticulousness i wanted to be sure i got it right. That was my primary objective, i wanted to be accurate. My first draft of the manuscript i sent to the publisher had almost 1500 end notes because i wanted the information to be cited, any reader could look and see where i got the information from because again i wanted to be the true story. Throughout this process, a crazy year, i like to call it, i was eligible for a sabbatical at that time from the university. I could not have completed this project without it. I simply couldnt have done it. It was a godsend for me and a great benefit, one of the great benefits of being the faculty member. Is a real luxury to have your employer give you time to work on a special project, something very few people get, a really wonderful benefit. So i worked 15 to 18 hours a day seven days week for months. Was intensive research. I had thousands of documents, i had transcripts from those criminal trials which totaled 28,000 pages. I spoke to anyone that i could think of who might be able to give me information, talked about the person i met in the corner cafe attract down on facebook. The guy who was the foreman of the jury convicted him. He was 22 years old during the five months he served as the jury foreman. I literally found him through facebook. I became a really good private investigator and talked to him and talk to everyone. Surprised me over and over when i asked people to talk to me, they agreed. Why would they . I dont know but they did. I was shocked at how willing people were to help them out. When i asked attorneys for documents, evidence used during trial, they gave it to me. I kept asking. Was successful so i kept asking more people to help me. Here is what i learned about asking people for information or asking people to help me. It is important how you ask. First big important thing to remember, do your homework before you ask. Dont expect the person you are asking for help to do the work for you. You have to know what you are asking for, you have to know what you are talking about. And i did that. I made sure oswald prepared before asking anyone to help me. Be prepared. Be prepared before you ask. Be polite. I know this seems simplistic. I honestly believe many of these people spoke to me because i asked them professionally, politely, and my secret weapons and i used before i was on this project, handwritten notes go along way with people. Everyone with a handwritten note, it is antiquated but especially in a day of email. Try it. I am telling you. Go to a job interview, sen a handwritten note after words. Someone does something for you, helps you out in your career, gives you information that you need, send a handwritten note. I am telling you it works. It is a simple thing but it works. Thank people for helping you. Be christians. One person i really wanted to talk to was general counsel for tyco at the time the scandal happened. The guy who was highprofile litigator in new york city joint tyco but couple years before the scandal broke. He was charged criminally and tried separately separate from the cfo and ceo and was acquitted of all criminal charges against him. Found out where he was. He was teaching as an adjunct professor at Pepperdine Law School in california, kept contacting him through email, linkedin, followed up every few weeks. He at one point replied to me and said he would be willing to talk to me, said he would call me but he never did so i kept contacting him. Very politely. And one night after midnight he wasnt in california at the time, it wasnt a time difference, he was in new york city. After midnight he called me. I picked up my phone and said id get it, you are persistent, i will talk to you. I was getting in bed, how good is my life . This is the persons name that i talked about over and over, part of the case study, i feel like i should know these people because i have spoken to them so many times. I was sitting in bed talking to mark selleck about this case, he said it was because i was persistent, i just kept asking. The persistent. Who should you ask . In law we have something called the best evidence rule the says when you are in court you should present the form of evidence that is the best, the original copy, i suggest the same thing, to ask questions, go to the person who has the most information, the person who can most help you. I went to the other executives and the other person i went to was Robert Morgan fall, i met with him last year, age of 93, still sharp as a tack. We disagree about this case. And a variety of things, and at the end i found out after the fact i just asked him, a way to contact people. The mail, telephone call, handwritten letters, i contacted Robert Morganthal through email. Does he really use email . But he does. She was there, especially to me. They both told me she has been my assistance for 38. 5 years, they were both very specifics. 38. 5 years, she email me and said i would be happy to meet next time we are in new york city. Knowing he was 93 i thought i should book a flight right away and get there just in case, and i met with him. I met many attorneys in new york, how did you get in to meet with you . He doesnt meet with anyone. Interestingly enough he told me why. After an hourandahalf i thanked him, do you want to know why i met with you . Sure. Because of my charm, i am delightful, because you are from Northern Kentucky university. I contact him from Ivy League Law school and business school. And might be a disadvantage from Northern Kentucky university, it is a great advantage to me. That is one of the reasons kozlowski spoke to me and asked me to write the book. They trusted me. They looked at kentucky univ. The most frequent question i have been asked is why did i write this book . It is a fascinating story. Who doesnt like business and law . To see someone go from humble beginnings, selfmade Business Executive at the top of his game, missing as much as anyone leading a successful company, bottoming out. He went to this prison the day they imposed the sentence, they handcuffed him, to an intake prison. And a facility called downstate correctional facilities, maximum security prison, spent 23 of 24 hours a day in a sell, those outside for 8. 5 months, didnt have access to telephone for 81 2 months. Stepped on a one inch big mattress. He was moved from that facility to a correctional facility where i visited him. Same thing. He was in protective custody. He thought he would be at risk in the general population because his highprofile person had lots of money, afraid he would be exported so he is in protective custody, and more in six years. He never went outside. He would not be outside. Literally a steel box, steal force, steel ceiling, steel walls, shut out from the wall with a one inch thick plastic mattress. I will satiate he had egyptian cotton sheets his former housekeeper send him twice a year. Small luxury that he got into the prison. The shift in lifestyle, i dont know how you adjust psychologically. How he kept from going in the same. How do you know i didnt . To shea. I looked at this case and once i started digging into it, i look at the evidence produced in the trial and the charges in the indictment and i had no evidence, not even close to support those charges. It is a mystery to me and a great injustice. No one had written the entire truth about this case. It was quite rewarding and even if no one read the book and i hope you all will, by and read it, for me it was a great project because it matters. It matters that someone wrote this story accurately, looked into it, the real facts, took the time to look at what the real facts were. A lot more, a short headline type of readers, in the internet doesnt help that. I Google Search is not the research. To dig deeper is and that takes time and effort to. Journalists were lazy, did not understand the material, and how ridiculous it is to buy 6,000 shower curtain to a 6 Million Birthday Party. Those were easy to understand. Surprisingly i had a chance to share my work to brought audiences, that has been great, national television, some of the best output my riding has been featured in. See that book in hard cover, the picture on their right, the day the book was released, between appointments i slipped into barnes and noble, my advice to you, what i learned from this project and tell you it continues to pay off to this day, another huge corporate scandal i thought about for years, a Company Called help solve, southern co. And ceo charged with crimes, later convicted of charges on a judge. He was acquitted of charges to the corporate scandal. Couple weeks ago i mentioned i met vote producer of fox business because i was on neil cavutos show a couple times. I know this producer pretty well and he has been helpful to me and a couple weeks ago on the case study of in this business. And i knew he was on a show after me. Here are some answers for it students, at and answer them or ask him. That would be awesome. I got home from new york. I answered it, this is catherine and . I said yes. I dont know if you understand how weird it is to talk to people from my text book. We study these people, i said there name hundreds of times through hundreds of students and for him to call me up is just weird and awesome. It is so much richer learning experience for the student and for me if we hear it straight from the people who were involved and that has been great. It came from asking a question. I am asking questions of time because it works. You have a new business you want to start, you want to invent a great new revolutionary product or service, you want to be more innovative in your career come ask questions, ask people to help you. It works for me and it should work for you as well. I am happy to answer any questions you may have. [applause] questions . I havent read your book yet. But the Birthday Party. There was a reason i am sorry. Customers coming to the party, it was an entertainment event, like bringing clients to the superbowl or something. It has been recorded the company paid for the Birthday Party. That is what you will read. And in for a judge did business judgment many times. My first visit, do you think he made any mistakes . I have a risk. He was an inmate instead of ceo. He was in europe that summer for they were trying to create new business with airbus. He was spending several weeks that summer in europe and was going to the paris air show, he was there and many types of people were in europe that summer. He had thrown a Birthday Party for his girlfriend, then wife by 2001 when this Birthday Party took place, he threw this Birthday Party for every year at their home in nantucket but since he was in europe decided to bring the party to him instead of him going back to nantucket for the party. So he planned this party in italy and his instructions were any person with expenses be charged him personally and business expenses charged to the company so there was a Board Meeting of a subsidiary the same week on the same island. For business decisions, not enough separation between personal life and Business Life and personal expenses and business expenses. According to all the testimony and records and i have seen the actual accounting for this party i was charged for the party and all the expenses associated with the party and the company was charged with the expenses associated with the Board Meeting and other meetings that were happening. And the people who flew over for the party paid their own travel expenses. It did appear fat that the company there was not enough clear separation. This wasnt the only instance. It was a man of many instances. Grew very quickly. He was proud of the fact he kept corporate operations very small, the same 140 people ran corporate operations even after the company had grown to 250,000 employees. It is still run like the momandpop shop, everything was informal and when he said do something there was no record, bob said to do this, steve said do that, mary said do this, it was very informal. He did not keep a clear line between business he associated himself too closely with the company. Looked like he believed tyco was his company, not a Company Owned by shareholders. The party was ridiculous and they played video of the party in both trials even though there wasnt a charge in the indictment related to those expenses not a single charge but they played 40 minutes of the video, no video of this party. Was a roman orgy seemed party. The birthday cake was a lifesize woman with sparklers on her breasts, very classy too. A lifesize sculpture of the statue of david that urinated vodka. He through Jimmy Buffett in for the party. It was extravagant and his wife divorced him as soon as he was convicted. It was a lose lose lose for him. Any other questions . [inaudible question] no. If you play the jury the day they left the court house they could not have told you what the charges were. Even as i spoke to him, it was some years later. Didnt understand what he convicted him of. He was 22 years old. That is really young to have that much responsibility, a 5monthold trial with the most sophisticated business evidence you will see anywhere. He even said to me there were several jurors who were unsure, they were going to vote not guilty and the jury foreman said to me i rankled them, those were his words, he said once we reach the first guilty verdict the rest of them fell like dominoes. Sounds like there was not a lot of consideration of each individual charge and even as i was explaining things to him when we met we met for three hours, he said why didnt they explain it in court . I dont know. He was convinced they did the right thing to this day, was convinced they made the right decision, he felt he understood the evidence and he felt like the sentence was a light sentence. Those are his feelings about it to this day. He was the only person on the jury with a College Degree also which not saying they werent intelligent people but i spent two years trying to make sense of this evidence and i am an attorney and a business professor and it was difficult for me. I wonder how much they absorb it. Given that your answer to that last question and that the jury clearly had trouble understanding, what is your opinion on the idea of a jury of your peers when it comes to business trials like this . Someone like Dennis Kozlowski doesnt paint he is not someone who is a sympathetic figure. There have been over 70 Insider Trading cases convicted in the last couple years in new york. How do you feel about a jury of your peers, the people who dont understand the evidence and should there be a change in that . I have done some reading on this and people have written about this whether the system is equipped to handle this and is not limited to business cases and any case where there are some technical, sophisticated evidence where you need a certain background to understand it. Taking the step back one of the first questions i asked was why kozlowski didnt waive his right to jury as a criminal defendant in new york he could have said i dont want a jury, i just want the judge to act as the judge and jury. He was, like, i had a case in 1970, he said i had to run down the hall is can get a copy of whatever this case was, and she did. He was telling me about a case that he tried and sophisticated business evidence, and it happened the jury happened to have two africanamerican women on the jury which in 1970 was very unusual. And he said that jury had six or seven businessmen that were kind of a clique, and they thought they understood everything and that they should be the decision makers. He said he overheard one of the africanamerican women saying to that clique of businessmen, hey, dont you know what this case is about . His point to me was jurors dont have to understand the details as long as they get the gist of it. Thats what he said to me. Now, all due respect, if im on trial, i want the jury to understand the details. [laughter] i dont want them to just get the gist of it. So your question about whether you can get a jury of your peers, i dont think you can in many cases. In this case youre in manhattan, and you think, okay, maybe some people from wall street will show up on the jury or some other Business Executives. These trials were set for six months. Who can walk away there their job on wall street for six months . Or who would, you know . All you have to do is claim financial hardship, and youre dismissed. Thats what happened in the jury pool. There were people who had better backgrounds to understand, you know, Corporate Governance and the responsibilities of directors and officers of a corporation, but they all said financial hardship, and they were dismissed. Ten the people left on the jury then the people left on the jury had no background or education or experience that helped them understand it. And this is not limited to just business cases. And i think your example of Insider Trading cases is the same thing. I dont know that our system is equipped to fairly adjudicate those types of cases. I dont know what the answer is, but i read an article where someone suggested that there would be some type of intermediate charge. Its not criminal, but its not civil, something in between, some kind of hybrid trying to solve that problem. Yes. Thank you for giving me the floor. My name is kimberly hop, and ill preface by question by being fair to you. I am a former employee of mr. Kozlowski. Unfortunately, the company i worked for for , i was a memberf at t, i was involved this the reduction in in the reduction in force. It was a direct relation to what took place. So i guess my question to you is what basis do you have to state there were no job losses as a result of mr. Kozlowski and his subordinates during this time frame . Well, kozlowski was known as a job cutter when he acquired companies, that was the first thing he often did, was cut excess people, try to combine forces. Now, his extra nation for that is the explanation for that is the companies they acquired were already struggling, thats why they acquired them, so ultimately they would cut jobs, and then the company would become healthier. Now, for someone like you, the individual who loses their job, thats little comfort. But my point as related to the scandal, the company didnt ever bottom out. It didnt even come close. And there was testimony in trial that the company was completely viable during trial, you know . So i have sympathy for anyone who gets caught in that. But yet kozlowski did that hundreds of times. He would acquire company, and the first thing on his list was to cut as many jobs as he could. That was his m. O. , i mean, thats what he did. Ive spoken to him about that multiple times, and he justifies it by saying we never acquireed a Healthy Company, the company was already struggling. In the long term we made it a Healthy Company and there were more jobs created, but for an individual, yes, i can see where thats hurtful. Can you tell me whether the cit group was the company you referred to yes, it was the acquisition in 2001 that went very badly very quickly, yes. And they spun it off shortly after kozlowski left the company, yeah. It turned out to be a very costly mistake for the company. You touched on kozlowski and his transition in life from Top Executive to prison inmate. How have you personally been able to handle the transitions with this becoming an allconsuming part of your life like any entrepreneur would . The last three years of my life have been abnormal. [laughter] i have to, you know, give props to my family who have toll rated my strange schedule and house covered with research, and i checked out for a very long time. The baby that was sitting here earlier cheering for me, she was born the 4th of july, last summer. I took two full days off, which is a big break for me. But other than that i was, i was pretty much buried, and it was tough. And i thought the work would end once the book was finished. But, you know, the attention its received, the national and International Attention is a surprise to me. I didnt expect it. And, honestly, its outside my comfort zone, especially the television stuff. Im to not really a fan of being on television. I love to watch television, but but i have to say i do love having the chance to talk about my work. It was a huge adjustment. The sabbatical itself is an adjustment when youre used to going to an Office Every Day and seeing people, and then you stay home all alone for months and months and months. I might have gone insane as well. But, yeah, its been quiten an adventure. I have to say, though, it has been the most rich and rewarding experience. I learned more about business and law and people than i, than i expected. I worked harder than i ever expected by about a million times. The hours it took to write a book, i underestimated significantly. But its been, its been a great experience. And, yes, as i said, i think any kind of project like this, one other big piece of advice i would give you as entrepreneurs, dont do anything that youre not passionate about, because you will give up. If you dont love what youre doing, if you dont feel like its important, if its not something that you love studying and learning and doing, find manager that you love. Because if you dont, youll never finish. If i didnt think this project was important and if i didnt have interest in the subject matter, believe me, i would have quit. I came close to quitting once or twice. Make sure you have people around you who are a great support system because you need it. By the way, he was paroled a month ago. Should have finished the story. [laughter] after sorry, rodney. Around eight and after eight and a third years in prison, he was paroled january 17th. Dean actually invited him to be here tonight, but he was not allowed to leave the five boroughs of new york city, so he wasnt able to be here. That was like a show and tell thing, you know . That a would have been fun. [laughter] but he, of course, hes thrilled about parole, and he really is looking forward to doing something productive with his life. You may not you might find this difficult to believe, you know, ive seen lots of journalists have written opeds saying who would hire him, he receives job offers daily. He has proven himself as a brilliant business person no matter, you know, if youre convinced or not about my conclusion. So he has a long line of people who want to hire him to consult or work for their businesses. And thats what he wants to do, he wants to get back out there. He did make the comment that he just wants to prove that he still has it so, you