The jury was still out, and Mark Belnick, star litigator and pillar of legal rectitude who, in a mysterious transformation, was supposed to have turned thief, could do little but wait. Belnick, former general counsel of Tyco International, had been getting updates from his lawyer about a last-second plea deal on charges he’d looted the place. Prospects, though, seemed remote.
Then, on the fourth day, after the jury asked to hear, again, the definition of “presumed innocent,” which some took as a bad sign for the prosecution, a deal started to gel. Neither side wanted to come away empty-handed. And the district attorney’s office, unhappy with its last Tyco case, which ended in a mistrial, clearly wanted a victory to trumpet. “The deal got softer and softer,” says Belnick’s attorney, Reid Weingarten of Steptoe & Johnson in Washington, D.C. The D.A. was prepared to drop all felony charges against Belnick, who’d been accused of stealing part of a $17 million bonus and hiding another $14 million in no-interest loans. Instead of 25 years in state prison, Belnick would risk none, and plead guilty to one misdemeanor. Plus—this was the sweetener—the D.A.’s office would use its influence to settle suits brought by the Securities and Exchange Commission and by Tyco.
“I don’t see how I can not take this,” Belnick thought. On the fifth day of jury deliberation, Weingarten met in the D.A.’s conference room. Tyco’s lawyers had flown in. Weingarten and assistant D.A. John Moscow seemed about to iron out a few last details when a call came in. Applause was heard coming from the jury room. The jury, it turned out, had reached a verdict. The plea deal was still on the table: Belnick could take it, and never hear the verdict. Moscow was for that. “Do we have a deal?” Moscow anxiously asked. It was Belnick’s decision.
In the elevator, Weingarten’s cell phone rang. It was Belnick, screaming. “Whatever you’re doing, stop,” he said. Belnick seemed emotional, almost angry. “We’re taking the verdict, we’re taking the fucking verdict.” Weingarten was surprised Belnick was putting 25 years in prison back on the table.
Belnick seemed willing to gamble everything to have his innocence affirmed. “I don’t want this settled in a way that someone could walk around saying, ‘You see? He did this crime, he did that crime, but he just didn’t go to jail,’ ” he’d explain later. “I’d fought and fought. I took the stand, which most defendants don’t. I’d earned that verdict. It was mine.”
“They took me by the shoulders and marched me down the corridor past where everybody worked,”Belnick said. Then he started to sob.
Outside the courtroom in the State Supreme Court, where the D.A. had posted Belnick’s annual earnings on giant charts—almost $19 million one year—Belnick faced his attorney.
“Am I crazy?” he asked Weingarten.
Weingarten answered in a low voice: “No.”
The jury filed in, dressed, as always, as if off to summer camp. Even before the foreman rose, a lawyer in the audience, one of Belnick’s former partners, began to cry.
In the TV room of his Central Park West apartment, Belnick shifts uncomfortably in an armchair. He places his arms on his belly, kicks off his loafers, and is almost relaxed when that name comes up: Moscow. The D.A. who’d tried to convince the jury that he, Mark Belnick, was a looter. Belnick’s fleshy hands swing to his sides. He strangles the space in front of him.
Belnick does seem an unlikely candidate for looter. Just ask any of his old Paul, Weiss, Rifkind, Garrison & Wharton admirers—he’d worked there for 26 years. They knew Belnick as a gifted litigator who, as one former colleague put it, “wouldn’t even go near the line.” In the eighties, he’d taken a star turn, investigating corruption for the U.S. Senate during the Iran/contra controversy, a career highlight that was televised (“Cherry on the cake,” says Belnick). By the mid-nineties, the country’s most powerful CEOs had him on their short lists when they got in trouble.
At Paul, Weiss, Belnick struck people as kind of nerdy, a straight shooter, maybe a bit of a know-it-all. He quickly impressed with his agile mind, but at the same time he was dutiful, eager to please. He was the not-quite-secure overachiever who put in thousands of hours a year—3,000 in some years—then took the late train home to the suburbs. And like so many others, occasionally, he griped about the money.
In his best years at Paul, Weiss, Belnick earned close to a million dollars a year, though usually much less. On that, he couldn’t comfortably afford the city lifestyle of many of his peers. So he’d raised his two girls (sent them to his beloved alma mater, Cornell) and one boy (proudly off to Syracuse) in upper-middle- class Harrison. He bought a home worth, in 1999, $1.1 million. Of course, it was very comfortable—everyone at Paul, Weiss seemed to judge their lives “very comfortable.” Life in Harrison was just fine. Belnick’s wife, Randy, a social worker, worked for a time at Rye Country Day School, where the kids went. Belnick, son of Orthodox Jews, served four terms as president of the conservative Harrison Jewish Community Center, where he’s still remembered as “a fantastic president.”
Then, in 1998, came a series of life changes that baffled his friends and that, to the D.A., formed a suspicious pattern. Belnick quit Paul, Weiss to become general counsel of Tyco. At collegial Paul, Weiss, some scoffed at the move. “Belnick traded the brass ring for the gold ring” was the swipe around the office. Soon, he bought a Central Park West apartment that cost almost $5 million, between purchase and renovations. Belnick got the money in an interest-free “relocation loan”—in court, Moscow enunciated the term as if it were in quotation marks—even though his Tyco office was just six blocks from Paul, Weiss.
The apartment was supposed to be a looter’s hideout, though as looter, Belnick offered certain disappointments. The apartment is grand, with spectacular views across the reservoir, but not posh; some of the furniture doesn’t quite match. One visitor wondered when the interior decorator would be hired.
His next purchase was more lavish. With a second interest-free relocation loan from Tyco, he purchased a $10 million home in Park City, Utah, paying a premium because the 11,000-square-foot house was on a ski slope.
The D.A. would eventually charge Belnick not only with hiding the two relocation loans but with grand larceny. The D.A.’s theory was unusual: that part of a $17 million bonus given by his boss, the CEO and chairman of the board, constituted theft because the boss failed to get it approved by the board of directors.
Then, superlawyer David Boies, on behalf of Tyco, sued Belnick, accusing him of having a secret arrangement with CEO Dennis Kozlowski. The SEC piled on, accusing Belnick of “egregious, self-serving, clandestine misconduct.”
Then, as if these developments weren’t confounding enough to those who’d known him, came the revelation—through leaked e-mails—that Belnick, the former synagogue president, had discreetly converted to Catholicism, a conservative strain practiced by Opus Dei, lately making an appearance as the evil force in The Da Vinci Code.
Even adoring former law partners couldn’t help but wonder if Belnick was suffering a very high-end breakdown. Opus Dei! They’d been to his kids’ bar mitzvahs. A Utah ski house! Belnick doesn’t ski. Just look at him—a shape like Alfred Hitchcock. If Belnick had really become a ski-loving Catholic—and none of his former partners had been informed—then who knew what other kind of kookiness was possible? “I thought maybe he was having a midlife crisis,” says one Paul, Weiss partner. What’s next: Drugs? A girlfriend? Larceny? “At one point,” says one admirer, “I was expecting he’d end up a suicide.”
To be elected partner at a firm like Paul, Weiss is a career-making event—Belnick was one of just two associates named in 1979. He quickly distinguished himself not only as a rising star but as a protégé of the revered Arthur Liman. “I don’t think anyone was closer to him in the firm than me,” says Belnick.
Liman was the soul of Paul, Weiss. He brought in business, and he got the front-page cases—Milken and Pennzoil, to name two—and still, as a Paul, Weiss lawyer should, considered the law a calling, more rewarding intellectually than financially. Liman carved out time to serve the public. He worked for the U.S. Senate committee investigating the Iran/contra scandal, insisting that Belnick serve as his deputy.
Belnick was private and not all that social with most partners. Even with lawyers who loved to work with him, he was most at ease, most entertaining, when the focus was work. Later, case complete, Belnick seemed awkward, almost timid. “Hey, kiddo,” he’d manage passing those same associates in the halls.
In contrast, Belnick’s relationship with Liman—almost twenty years his senior—seemed casual and easy. He called Liman “Art,” which no one else did, and at one point, Belnick even gave up a corner office, opting instead for the one next to Liman’s. Both Jews and, for years, both Democrats, they kibitzed and strategized. Liman was the quirky genius, Belnick the bright cutup, the teacher’s pet and semi-hypochondriac whom Liman indulged. “I went to Arthur with personal issues all the time,” says Belnick. Even cockamamie ones.
One day, Belnick, paranoid about his kids, called home, got no answer, tried again with the same result, and so, naturally, raced into Liman’s office.
“What’s happening? Tell me,” said Liman, ending his meeting.
“My daughter has been kidnapped,” Belnick blurted out.Liman said, “Let’s get the FBI.”
“We were both walking around holding our heads,” Belnick recalls. “I’m almost hysterical, and he’s not far behind.” An FBI agent was dispatched to Belnick’s house, where he discovered the housekeeper driving up with the dry cleaning, his daughter strapped safely into her car seat. Belnick and Liman laughed together at their silliness.
“I loved Mr. Liman,” Belnick says. Liman returned the favor. “Arthur adored Mark,” says one partner who worked with both men, adding, “Mark needed to be adored.”
When Liman died in 1997 at the age of 64, Belnick delivered the emotional eulogy. “Whenever we were in trouble, whenever we needed a wise judgment … we’d ask you,” Belnick said. Looking back, Belnick says, “when Arthur died, the music went out of my practice.” At lunch one day in 1998 at a midtown Manhattan restaurant near Tyco’s offices, Dennis Kozlowski grabbed a napkin off the table, took out a pen, handed both to Mark Belnick, and said, “Write this down.” He then proceeded to reel off a list of terms.
Belnick and Kozlowski both grew up in New Jersey, but had nothing else in common. Kozlowski, the son of a Catholic boxer, played basketball at Seton Hall. Belnick, the son of a Jewish accountant, was student-government president at Cornell. Still, Belnick found Kozlowski impressive. “He dominated a room,” says Belnick.
In Kozlowski’s ten years as CEO, Tyco had gone from a $1 billion company to $30 billion. “He was on the cover of every business magazine,” says Warren Rudman, the former senator and now a partner at Paul, Weiss, who made the introduction. To move to the next level, Kozlowski needed a blue-chip general counsel.
Kozlowski told Belnick he wanted him. Belnick knew that meant not litigating, but then he had lately had his fill of litigation: The previous year he’d had four cases back-to-back. He’d won them all—“He was at the top of his game,” recalls one partner—and still his compensation hadn’t changed that much. All Paul, Weiss partners get paid primarily based on seniority. The year he embarked on his four-cases streak, his take-home pay was $1 million. The year before, Belnick had earned $600,000. For Paul, Weiss partners, the law might be a calling, but when you’re working for clients in business, it’s hard not to think, as one lawyer complains, “I’m smarter than they are, but they’re making ten times what I make.”
“Was I attracted by the kind of compensation I could earn at a place like Tyco?” Belnick asks. “The answer to that is yes.” Plus, he told himself, he wasn’t signing up for life. If he could make his family secure, who knows, maybe he’d run for Congress.
These were the terms that Kozlowski told Belnick to write down: a $700,000 salary, a $300,000 signing bonus, a guaranteed annual bonus of between $1 million and $1.5 million or one-third of Kozlowski’s cash bonus, plus stock and options worth, at one point, $25 million.
“I wouldn’t have had the nerve to ask for that much,” responded Belnick.
In Belnick’s telling, every suggestion was met by accommodation. It was a fairy tale, not just of compensation, but of what it represented: appreciation. Belnick’s kids were nearly grown; he wanted to move to the city. No problem, said Kozlowski. Tyco had an interest-free loan program. It was designed primarily to relocate employees to the Florida headquarters. But Kozlowski said he could put Belnick into that program.
If Belnick was accustomed to Paul, Weiss collegiality, if he was keen to be adored, Tyco proved a trial. The first day on the job, Belnick found Kozlowski, his direct supervisor. “I’m here,” said Belnick eagerly. “Where would you like me to start?”
Kozlowski pulled an index card from his pocket. “Let me show you how I manage this company,” he said. The card had six phone numbers on it. He added Belnick’s number. “If I need something,” he said, “I’ll call you. Other than that, you run your show and you do it right.”
From the start, Belnick didn’t fit in. Many at Tyco, which at one point was acquiring a company every two weeks, didn’t like lawyers’ slowing things down. “He didn’t have a business head,” it was said. Even Kozlowski, who’d recruited Belnick, couldn’t seem to correctly pronounce his name—Bel-a-nick, he said. “If Kozlowski could have thrown Mark over the side to accomplish an objective, I think he would have,” says Boies.
Isolated at Tyco, Belnick also lost touch with most of his old Paul, Weiss colleagues, as if he’d closed that chapter. “It was a horrible year,” says Belnick. He was used to collecting praise and thrived on that. At Tyco, he hardly ever saw his boss. “I was the lone man on an island writing out policies,” he says.
Soon, though, Belnick found companionship in an intensely bound new community, and in particular with the figure at its center: C. John McCloskey, a former Merrill Lynch stockbroker who’d become an Opus Dei priest. The sect, which believes that holiness is possible in the workplace—even for lawyers—has sometimes been accused of secretiveness. But McCloskey is an open book. He’s cheerful, thoughtful in conversation, ending sentences with an upturned hmm. Then there’s his Website. There, anyone can learn that he’s an unusual combination of Ivy League–ness (Columbia grad, strong interest in squash), religious conservative, and aggressive evangelist. “Priests,” he says, “are the Navy seals of the Catholic Church.”
McCloskey’s flowing black cassock, his self-assured orthodoxy, wouldn’t seem to recommend him as spiritual comfort to a Jewish New York lawyer in the midst of a rough patch. Plus, Belnick, once a Democrat, had recently been a leader of a firm that supported liberal causes—Paul, Weiss represented Planned Parenthood pro bono. And Belnick, as he’d say later, “wasn’t mad at anyone. I loved Judaism, still do, always will.”
But McCloskey’s specialty was to convert wealthy and, often, it seemed, Jewish people. He’d converted financier Lew Lehrman, TV host Lawrence Kudlow, columnist Robert Novak, and Dr. Bernard Nathanson, a founder of the National Abortion Rights Action League. “C. John the Baptizer,” Belnick would call him.
For McCloskey, the key is patience and, he adds, an individualized plan. Converting Nathanson took eight years. Belnick’s was faster. Around 1996, Belnick says he felt a “tug” to learn more about Roman Catholicism. One impetus was Maureen Hartman, wife of his good friend David Hartman, the former host of Good Morning America. (They met through their kids’ private school.) She spoke of Catholicism to Belnick, who suddenly found he wanted to be in a church.
I have got to find out whether I am having a religious breakdown, Belnick thought. Belnick searched online for a priest, found one, then found another. Mistakenly he e-mailed Father McCloskey, who quickly responded.
McCloskey had hatched a theory about American men: They’d lost the ability to maintain, as he put it, “virile” male friendships. “Friendship Deficit Syndrome,” he called it. He believed that male friendship—true friendship—would prove a great tool in what McCloskey occasionally called “the evangelization business.”
Soon, Mccloskey and Belnick were meeting at least once a month. Belnick found him charming, funny, intelligent. McCloskey, 50, proved a great encourager—“I love to affirm,” he says—and, says Belnick, “a great friend.” McCloskey quickly incorporated Belnick into his circle of conservative Catholic friends, including Lehrman and Bowie Kuhn, the former baseball commissioner.
Belnick invited his new friends to pray for him and, in turn, adopted their conservative politics. (He joined them in calling New York City “Sodom and Gomorrah.”) Robert Best, another McCloskey friend, who runs the anti-abortion Culture of Life Foundation, invited Belnick to join the board of directors. “Bob Best is pure love,” Belnick would say. He had cause. It was Best who would help arrange Belnick’s exhilarating visit to the pope. “Randi and I have had a quick glimpse (and me a foretaste) of heaven,” reported Belnick after the encounter.
Belnick became an Opus Dei cooperator, an official devotee. As Belnick considered conversion, McCloskey sent him to Nathanson, who recalls, “He wanted to know, did I regret leaving the Jewish community?” In particular, Belnick worried about his elderly Jewish parents. “I didn’t think they needed that kind of tsuris,” says Belnick, who resolved not to tell them. Belnick also worried about his wife’s reaction. “I didn’t get it,” she says. “I still don’t.” In fact, Randy Belnick, his wife of almost 30 years, said she didn’t want to hear any more about it. Belnick respected her wishes until February 28, 2000, the night before he was scheduled to convert. It was near 2 a.m. They were in bed, but Belnick couldn’t sleep. “We’ve never had secrets from each other,” he says.
Belnick awakened his wife and broke the news.
“You’re telling me at 2 a.m. that you’re going to do one of the major changes in our lives ten hours from now?” she said.
“She was so upset, I called it off,” explains Belnick. At 6:47 a.m., he wrote to McCloskey: “My heart is broken. But all I can believe now is that the Holy Spirit is telling me that I cannot do this without Randy’s explicit consent … The only good news is that … she now realizes how much this means to me and that she wants time to think about it and try to get adjusted to it.”
At lunch that day, he said to his wife, “I won’t do it until you tell me I can set a date.”
“I may tell you ‘never,’ ” Randy responded.
“Let’s not think about that,” said Belnick.
Belnick began donating money. Cornell and Columbia were still the major recipients, but now he included Catholic causes, including the Culture of Life Foundation and Thomas Aquinas College. Of course, he donated to Opus Dei projects, though not, in total, more than $10,000, says McCloskey. The Wall Street Journal reported that he’d donated “$2M”—or, the Journal said, “two million dollars”—to Opus Dei, but that wasn’t true. “I’m not crazy,” says Belnick. The “M,” he says, was the Roman numeral that means thousand. That donation to Opus Dei was $2,000, a figure confirmed by a source who viewed Belnick’s tax returns.
Around that time, Belnick traveled continually for Tyco—the company had offices around the world. He stayed in constant e-mail communication, shooting off messages at all hours. In 2000, Randy moved with their high-school-age son to the Park City house. Belnick had been elated to enter the second-home club. “It felt good,” he said. He got there as often as possible, but e-mailed frequently. He also e-mailed the kids, Tyco personnel, outside lawyers, speakers for a pre-law course he taught at his beloved Cornell.
But the e-mails he sent to his new Catholic friends were unlike any others. In them, Belnick seems like an adolescent in love, according to copies obtained by New York Magazine, in love with Catholicism, and with its presiding figure, McCloskey. “I’m on fire with the faith,” he wrote to McCloskey, whom he referred to as his “human guardian angel.” “I love you for your understanding and wisdom,” he wrote to McCloskey. When McCloskey moved to Washington, D.C., Belnick longed to see his old friend: “Jesus is a great companion, having Him is having everything (but I still miss you …).”
Belnick’s former colleagues were baffled and a little hurt when news reached them of his new religious enthusiasm, as if he’d defected yet again. Not that they’d been told. Belnick split his friendships: pre-McCloskey and post-McCloskey.
When the lawyers had read the e-mails—the Wall Street Journal published excerpts—they claimed not to recognize Belnick. “It didn’t sound like him,” says one former colleague. Another former partner simply denied that he’d converted. “I told people the information was wrong,” the partner says.
His admirers at the Harrison JCC were equally befuddled. “Opus Dei caused us more shock than anything else,” says the treasurer. “It shook us.”
Belnick, though, was on an intense and meaningful journey, one he longed to complete.
“It all works out for the best for those who love God,” McCloskey wrote after Belnick’s first canceled conversion. “Your time will come soon.”
Then one day in Utah, out of nowhere, Randy said, “Do it.”
“Do what?” said Belnick.
What she meant was: Join the Catholic Church. “How can I say no if this is something you want?” said Randy. She wasn’t sure she’d attend the ceremony. Belnick understood. Still, he was overjoyed. He made up guest lists, inviting Nathanson, Lehrman, Kuhn, Thomas Dillon (president of Thomas Aquinas College), and David Hartman. Belnick promised to wear Hartman’s wife’s brown scapular.
The ceremony was set for April 25, 2000, at St. Thomas More on East 89th Street. The day before, Belnick still wasn’t sure if Randy would come, but she had made up her mind. She’d surprise him—Wouldn’t that be cool? she thought—and show up. Then her taxi got caught in traffic, and she entered midway through the ceremony, which made it seem even more dramatic.
“I turned my head,” remembers Belnick, “and there was Randy, and it was the most amazing feeling I ever had.” Soon he’d pray that “the HS”—the Holy Spirit—would bring Randy along.John W. Moscow, the assistant district attorney who prosecuted the case against Belnick, may be the most feared prosecutor in town. Mention his name, and defense attorneys chime in, always off the record, “No superego,” “No discretion,” “Messianic zeal.” His supporters don’t entirely disagree. “Convinced that he’s right, he can’t be talked down,” says one lawyer who worked with Moscow. “He always thinks he’s absolutely right.”
Many lawyers pass through the D.A.’s office on their way to lucrative jobs representing the kind of people they once put in jail. Moscow, a graduate of Harvard Law School, could have gone that route. “He had a lot of alternatives,” says Boies. Instead, Moscow, a year younger than Belnick, has worked for District Attorney Robert Morgenthau for nearly 30 years. His salary is $149,000.
A prosecutor’s compensation, in addition to vast subpoena power, is the conviction that he’s on the right side. For Moscow, the plotters, the actively corrupt, aren’t the only target. Those who lend their good names, the cover of their reputations, to corrupt enterprises should share responsibility. “Moscow is personally affected by what he thinks of as breaches of integrity,” says Boies, whose firm, Boies, Schiller & Flexner, cooperated with Moscow on the Belnick case. “Particularly when those are done by lawyers.”
By all accounts, Moscow, deputy chief of the investigative division, is a gifted, tenacious investigator. A dozen years ago, he almost single-handedly unraveled the Bank of Credit and Commerce International scandal when the U.S. Justice Department couldn’t. The complex international BCCI case seemed beyond the reach of a local D.A., but Moscow effectively shut down the corrupt institution. Then he personally prosecuted Robert Altman, the well-connected attorney who’d done work for the bank.
In 1992, Moscow lost that five-month trial—the forewoman said she “felt insulted” by the prosecution’s case—and since then, he had not personally tried a case, until Belnick’s crossed his desk. For that, Moscow came out of trial retirement.
Perhaps the most extraordinary aspect of Belnick’s trial was that both sides agreed on the basic facts. Belnick got a $17 million bonus, which, he’d later learn, wasn’t approved by the board of directors. He took $14 million in no-interest loans, which he did not disclose on questionnaires used to prepare information for shareholders.
Why? That was the question—really, the sole question—at the heart of the trial. Was Belnick’s intent criminal or had he acted in good faith?
To Moscow, Belnick was that convenient person: a collection of talents with no moral compass, a legitimizing reputation whose grip on the rules loosened at the prospect of personal gain. If Tyco was a looter’s paradise—and that was the prosecution’s unyielding assumption—then, Moscow seemed to imply, wasn’t the general counsel duty-bound to act as watchdog? Or guide dog? Why take advice on whether to disclose a loan from a finance guy, which Belnick had? “Weren’t you,” as Moscow repeated, “the company lawyer?” Clearly, Moscow wanted more vigor from a general counsel, more outrage, more Moscow. “A perfectly ridiculous idea,” snaps Belnick, “with no basis in law.” And yet, even some devoted former colleagues wondered. “If shenanigans were going on under Mark’s nose, where was the ethical guidance?” one said. “Mark should have known better, his antennae should’ve been raised, he had to look the other way,” said another partner.
For Moscow, crimes, and perhaps criminals, are simple things with uncomplicated motives, and money is the key one. Indeed, at the heart of the prosecution’s case was the supposed affront of all that money—Belnick would receive $37 million from Tyco—and the company is withholding a severance package worth another $20 million. Even Boies, whose firm would receive more than $30 million from Tyco, said, “The question a lot of people will ask is, why would anybody think that they could take that much money?”
Not many defendants testify in their own defense. Belnick insisted. The jury wouldn’t find him entirely convincing—“He was the prosecution’s best witness,” said one. But Belnick told Moscow, “I’ve been waiting for two years to tell the truth about the charges brought against me.” To Belnick, the charges were slanderous. “I consider the law profession a sacred trust,” he says. The prosecution’s case was preposterous. Why, if Kozlowski was looking for a partner in crime, would he recruit a Paul, Weiss lawyer with an impeccable reputation?
Belnick contended that he’d been unpopular within Tyco because, among other things, he was ethical. He advocated a product recall that most people said wasn’t necessary. He brought in the SEC’s former top cop to help sort out a potentially thorny securities issue, which is not recommended if one’s intent is criminal. In Belnick’s mind, he got the huge bonus because he earned it. As far as not disclosing the relocation loans, he acted in good faith. That was company policy. The CFO told him so.
If Belnick admitted a fault, it was that he was sometimes inattentive to matters of personal finance—he signed the same Tyco $500,000 promissory note twice—and perhaps too trusting of others’ advice.
This was the defense’s challenge: to convince the jury Belnick could be both a sophisticated litigator who parsed motives, predicted outcomes—“He knew everything that would happen two years in advance,” says a partner—and also at times a naïf, nonplussed at how his dewy dreams all were coming true. The kind of person who didn’t scrutinize loan documents, trusted others’ advice, the kind of person who could say, “I understood the chairman of the board”—Kozlowski—“to be a truth teller,” and mean it.The state supreme Court building on Centre Street, majestic from the outside, resembles an aging high school inside. Waxed floors, hard polished seats, and elevators that mysteriously stop between floors. Most of Belnick’s family—his wife and three kids and in-laws—sat behind the defendant every day. His Catholic friends didn’t frequent the court, though McCloskey, transferred to London, sent daily e-mails. But each day, lawyers from Paul, Weiss, most of whom hadn’t been in touch with Belnick for years, crowded the courtroom, quietly working their BlackBerrys. For some, it was a complicated decision. Belnick had shut them out, as if he felt a lingering resentment toward Paul, Weiss. “But now he needed us and it didn’t matter how he treated us,” said one partner. “I’m hoping Mark learns some lessons about friendship.” On some days, there were as many as fifteen partners, legal talent worth close to $10,000 an hour.
Moscow charged that not long after Belnick arrived, he teamed up with Kozlowski to sell out shareholders. It seemed difficult to believe—Kozlowski didn’t really like Belnick—but Moscow thought he’d pinpointed a meeting where the two must have discovered a common interest.
The meeting occurred not long after the SEC launched an investigation of Tyco in December 1999, looking into whether Tyco was fudging its numbers by counting reserves as income. Formal charges could be catastrophic for Tyco, which had used its buoyant stock to purchase other companies.
For Tyco, the burden suddenly fell on the soft shoulders of Belnick. Belnick practiced before the SEC, had a reputation there. One CEO represented by Belnick before the SEC recalls, “The first thing Belnick asked me was, ‘Did you do it? If you lie to me and I find out, you’re dead.’ Because,” this CEO explains, “what happens is that you walk out of the SEC hearing room and then the SEC guy asks Belnick, ‘Is he a bad guy?’ Belnick says either ‘No, he’s a good guy’ or he says ‘No comment.’ The SEC counts on the reputation of a guy like Belnick.”
Belnick welcomed the pressure of dealing with Tyco’s SEC problems. “This is going to sound bizarre, but during the SEC investigation, working night and day, I enjoyed working at Tyco,” Belnick would later say. “I was working to save the company, and I hate to say that’s enjoyable, but that’s what I do.” Kozlowski’s fate was in his hands. He got the relationship he’d long wanted. They spoke every day. Says Belnick, “Dennis was constantly calling me.” Belnick hired outside counsel—William McLucas, the former head of enforcement at the SEC, now at Wilmer, Cutler, Pickering, Hale & Doore, and McLucas’s partner Lewis Liman, son of Belnick’s late mentor. And they started producing documents, thousands of them, for the SEC staff.
One document proved tough to get. When Belnick finally extracted it, he understood why: It showed that Kozlowski had planned to fire him. “I’m tough, but this hurts,” he told Kozlowski, who quickly disavowed the information.
Another document, which covered loans made to Kozlowski by Tyco, proved tricky. Kozlowski, who’d borrowed more than $250 million from Tyco, used the money to pay for everything from dentist bills to a beach-house expense for Karen Mayo, a person identified on the document as Kozlowski’s “mistress.” Inquiring about these expenses, Belnick was told that Kozlowski brought the balance to zero by the end of the year.
Later, it turned out Kozlowski had reduced the balance by using other company loan programs, and also by forgiving some loans. (The Boies firm figured he was on the hook for about $40 million.) But for the purposes of the SEC, interested in whether reserves were used to inflate revenues, “the mistress document,” as it became known, didn’t seem relevant, just embarrassing.
As far as misusing reserves, McLucas found some corner-cutting—and didn’t like the implications—but, as he told Belnick, “nothing material.” In consultation with McLucas and Liman, Belnick decided to white out some of Kozlowski’s expenses, and the word mistress, before turning in the document to the SEC. Whiting it out could draw attention to the document, and in that case, Belnick, McLucas, and Liman agreed to reveal the original. It never came to that.
Belnick’s key decision was to send Tyco’s CFO before the SEC, an unorthodox move. Offering up a high-level executive for a free-for-all cross-examination could, everyone knew, open a can of worms. Later, McLucas would compliment Belnick for the bold call. It took, he said, “the right combination of street smarts, balls, integrity, judgment, and lunacy.” Certainly, Kozlowski understood the far-reaching implications of Belnick’s decisions. Before the CFO appeared in front of the SEC, Kozlowski took the company plane—he used it like a taxi—to Washington, checked into the Four Seasons, where Belnick was staying, and phoned him. Belnick hadn’t been expecting him. “He wanted to see me, and would I please come to his room?” Belnick told the court. In Kozlowski’s suite, Belnick reported on the SEC investigation. “Do you think the SEC is going to go bad?” asked Kozlowski.“No,” said Belnick. Kozlowski praised Belnick for doing a terrific job—among other things, he’d gotten shareholder lawsuits against the company dismissed—and told him the company was awarding him 100,000 shares of stock worth, at the time, about $5 million. “I was thrilled,” Belnick says. “All I had wanted to do when I got to Tyco was to meet the challenges.” He was glad to have the bad feelings of his “rookie year,” as he put it, behind him.“Well, that’s not all,” Kozlowski said. He said the company had decided that if the the SEC inquiry went well, Belnick would get an additional $2 million cash bonus and 200,000 more shares, worth about $10 million. Belnick didn’t know it, but the board of directors hadn’t voted on this second bonus, and never got around to it, and it was here that Moscow smelled a rat. In Moscow’s mind, that amount of money, not to mention the lack of board approval, should have made Belnick suspicious. Was Kozlowski worried that Belnick or McLucas, the former top cop at the SEC, might pull too hard on the Karen Mayo thread? Belnick wasn’t entirely comfortable with Kozlowski’s generous offer.
In the suite at the Four Seasons, Belnick recalls smiling at Kozlowski—“a small smile,” he calls it. Then, he remembers, he told Kozlowski, “If there’s any thought that there’s anything more I can do to make this investigation end sooner if I was properly incentivized, wipe that thought out of your mind.”
“I just told you what I told you,” Kozlowski said.
Belnick, having made his point, said, “I’m grateful to you, and I hope I earn the bonus.”
On July 13, 2000, the SEC officially closed its investigation, recommending no action. Tyco stock price rose 11 percent over the next few days. “You really saved the company’s ass,” McLucas wrote to Belnick, “and, more pointedly, Kozlowski’s and Schwartz’s reputations and careers.”
Certainly, Kozlowski understood that. Belnick, who hadn’t fit in, who was to be fired, was now a company hero. “Dennis came to my office,” recalls Belnick. “He was ecstatic.”
Belnick joyfully spread the news to McCloskey. He wrote, “Justice triumphs—and the Founder comes through again!” To which McCloskey responded, “Great news. Congrats on your sanctified work.” The same day, Belnick sent a memo asking for his bonus. That year, he’d earn $18.8 million. Soon Kozlowski signed him to another three-year deal, worth $20 million. In the courtroom, Moscow, broad-shouldered with a head of thick white hair, had an unsettling energy. He would often start rocking, one foot forward as if toeing a starting line.
Moscow had no documents to prove that an agreement had been reached that night at the Four Seasons. Kozlowski didn’t testify, which meant that Moscow had only Belnick’s account. The prosecutor’s tactic was to bully the defendant on details.
“What time was it that Kozlowski called you?”
“It was fairly late in the evening, I think—nine, ten.”
“Did you go to his room?”
“Did you sit down?”
What was Dennis Kozlowski wearing at the meeting where he offered Belnick a bonus worth $17 million?
“You’re not serious?” Belnick said.
“I was serious,” Moscow later told the jury. A meeting at which you’re offered $17 million ought to be memorable—unless, of course, there were things a person didn’t want to remember. Why, after all, would Kozlowski offer so much money for simply managing an investigation?
“There can be amounts of money so large that the person who gets them knows the stated purpose is not the real purpose,” said Moscow. To Moscow, if you’re offered $5 to take groceries up some stairs, that’s one thing; if you’re offered $5,000, that’s another matter entirely. Kozlowski had to be worried that if Belnick and McLucas followed the Karen Mayo money too assiduously, his money-shifting shenanigans would be revealed.
“You had the mistress document?” Moscow asked Belnick on the stand. He meant before the meeting with Kozlowski.
“I had that, I don’t know if—yes, I had it,” said Belnick.
“And you showed that to Kozlowski [at the Four Seasons meeting]?”
“Probably, yes.” In Belnick’s mind, it wasn’t a big deal. The only thing that bothered Kozlowski was the word mistress. This was his longtime girlfriend, now his wife. Moscow saw it differently.
“And that was the meeting he promised you your bonus, isn’t that right, sir?” asked Moscow.
“It was the same meeting.”
“No further questions,” said Moscow.
Of course, Belnick hadn’t been charged with conspiracy. And, in fact, even the larceny charge didn’t depend on the quid pro quo that Moscow implied. The basis of the supposed larceny wasn’t the size of the bonus or the circumstances in which was offered, but merely that it wasn’t approved by the board. And that seemed the responsibility of someone other than Belnick.
The day Mark Belnick broke down on the stand, he wore the same drab executive uniform as every other day of the eight-week trial: blue pinstripe suit, an inch or so short in the leg, red tie, light-blue shirt rumpled above the waist. His lawyer led him through the closing days of his four years at Tyco.
Kozlowski had already resigned, after being indicted by the Manhattan D.A. Boies’s firm had been brought in by a committee of the board of directors—which claimed to be outraged at Belnick’s $14 million in relocation loans and $17 million bonus—and soon fell into conflict with Belnick.
On June 10, 2002, a company director went to Belnick’s office, which he’d decorated with images of saints, and read from a sheet of paper: “You have been fired,” Belnick remembers hearing. “You know what the issues are.”
“I don’t know what the issues are,” Belnick said.
Belnick is still pained at the memory. How could they be so mistaken about him? He’d tried to do his best, always. “I was trying to do the right thing all the time at Tyco,” Belnick says. “That’s all I ever wanted to do. My end was to make Tyco a model of corporate governance.” Should he have been more aggressive in following up the Karen Mayo lead? He’s thought about it. “Only with perfect knowledge retrospectively of what was going on,” says Belnick. It “was managed on the books in a way that I wouldn’t have seen it. You would have kept seeing that loans were paid back. You wouldn’t know about any of the spending where Kozlowski got it to zero by forgiving himself the loans.”
Belnick wanted to explain this to the director, but could not make his case. “That doesn’t matter,” the director told Belnick. “You’re fired, and you’ve got two minutes to get out.”
When Belnick looked up, there were two large security guards at the door.
“I picked up … ,” Belnick later told the jury but couldn’t proceed.
“Your briefcase?” prompted his attorney.
“My briefcase,” continued Belnick, anger flashing in his voice, “and they took me by the shoulders and marched me down the corridor where everybody worked and took me out of the building.” Then Belnick started sobbing. The judge recessed, the jury filed out. Belnick stepped down, unhooked a velvet rope, and crossed into the audience. His jacket undone, he moved toward a side exit that, inexplicably, was stuck. He stood alone for a moment, suffering, seemingly helpless, when an old law partner of his approached. Martin London, 70, had fallen out of touch with Belnick during his Tyco years, but had been in court nearly every day. Belnick seemed to collapse then, his shoulders shaking, into London’s embrace.
In the courtroom, when Belnick shouted from the defendant’s table to his wife, “I’m going to take the verdict,” she thought, It’s Arthur. She thought Liman was “taking him by the hand and saying, ‘This is what you have to do,’ ” which Belnick would later find a pleasingly Catholic notion.
As the foreman rose to deliver the verdict, Belnick crossed himself, turned to his wife, mouthed, “I love you.”
Three Paul, Weiss lawyers sobbed as the foreman said “not guilty” to each count. Belnick, charging across the velvet rope, hugged everyone, crying. “For two years, what they did to me,” he shouted.
The jury, it turned out, had sympathized with Moscow’s view. Belnick had his nose in it. Some seemed to have hoped for a more vigilant presence. “We felt he was morally guilty,” said juror Juliette Williams. “He didn’t hold up his fiduciary responsibilities to the shareholders.” But the law is the law, and reasonable doubt favored Belnick. The jurors knew what theft is, and this didn’t look like that. “Everything that he got was documented through e-mails and memos with the company’s signature,” said Adalgiza Elamir, a nurse.“The evidence we had satisfied us that he got it the right way.”
In the elevator, a bunch of Paul, Weiss attorneys rode down together. A message flashed on all their BlackBerrys. It was from London: “Fuck Moscow and the horse he rode in on.”
Days later, at home on Central Park West—“windows on the park,” they sometimes call it—Belnick seems at moments drained, and then, in a flash, invigorated. The system had worked. The Founder had come through, again. McCloskey might believe suffering serves a purpose, but that was not his only message. He’d e-mailed the day of the verdict: “I’m writing this and crying at the same time.” Belnick’s new faith in McCloskey’s “loving Father” had held fast through his recent trials. (Even his parents have accepted it.)
Vindication feels terrific—though, at times, quite close to anger. At home, Belnick isn’t entirely peaceful or prayerful, or mooning about the good citizenship he tried to practice. He doesn’t have to be. Or perhaps it’s just not as real as the pain he’s endured. “They”—he means Moscow—“tried to ruin my life,” says Belnick. And the gang joined in. Indeed, they’re not through yet.
Boies says that Belnick will be litigating the civil cases for the rest of his life. And, then, who knows if a person ever really gets his reputation back? “There are no heroes in this case,” one of Belnick’s old partners says, and he includes Belnick.
In that undersize chair, Belnick’s calm goes. Now, at least, he’s ready to fight back. He seems suddenly a bare-knuckled lawyer out for his due. “They”—he means Moscow—“thought I’d knuckle under,” he says, “They didn’t know who they were dealing with. I’ll get even. They”—he means Tyco—“want to find out what it’s like to litigate against me. They’re about to find out.” He has a new mission. According to his deal with Kozlowski, Tyco owes him $20 million in severance, not including attorney’s fees, which he also intends to recover.
“They’ve got my money,” he says. “I want it back.”
Additional reporting by Mathew Martz