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For Kozlowski, an especially grim future
A crucial difference separates the ex-Tyco CEO from other convicted execs: It's called state prison.
June 21, 2005: 3:23 PM EDT
By Krysten Crawford, CNN/Money staff writer
If Kozlowski and Swartz get six years or more, they're headed to any one of 17 maximum-security prisons in New York. The Attica Correctional Facility is pictured here.
If Kozlowski and Swartz get six years or more, they're headed to any one of 17 maximum-security prisons in New York. The Attica Correctional Facility is pictured here.
State prisons don't look like this federal prison, where Martha Stewart recently spent 5 months.
State prisons don't look like this federal prison, where Martha Stewart recently spent 5 months.

NEW YORK (CNN/Money) - Just a few city blocks separated the Manhattan courtrooms where Dennis Kozlowski and John Rigas both appeared in recent days.

Unfortunately for Kozlowski, those few city blocks made all the difference in the world.

Kozlowski, who was found guilty Friday of stealing $600 million from Tyco International while he served as its CEO, was tried in state court. Rigas, the founder and former CEO of bankrupt cable giant Adelphia Communications who was sentenced Monday to 15 years, was tried in federal court.

As they both face possible life terms, that distinction becomes critical -- much more so for Kozlowski, 58, than for Rigas, 80.

Unlike Rigas and other recently-convicted corporate executives like former WorldCom CEO Bernard Ebbers, Kozlowski is now headed for state prison. So is Mark Swartz, the onetime Tyco CFO who was also convicted Friday of the same crimes as Kozlowski.

New York state currently houses about 63,300 inmates in 70 prisons. As far as former New York prosecutor David Gourevitch is concerned, any one of them will be a terrible experience.

"In all of these places, it's a choice between really bad and worst," said Gourevitch.

Because states typically prosecute crimes like murder and rape, state prisons are where the most violent offenders are and where the living conditions are described as brutal. Security, by necessity, is extremely tight.

Not so in federal prison.

Often called "Club Feds," federal prisons are where white-collar criminals typically wind up. As anyone who followed Martha Stewart's five-month stay at a federal prison for women dubbed "Camp Cupcake" knows, federal prisons can look and operate like boarding schools. Often there aren't any bars, just lines that inmates are told they cannot cross. Amenities like tennis courts are not unheard of.

There are no luxuries in state prison, legal experts say.

But the most important distinction between the two systems, they say, boils down to safety.

"The fed system is unpleasant, but at least you're physically safe there," said Gourevitch, who's now in private practice in Manhattan. "In the state system, nobody would say you're physically safe."

From sales tax evasion to $600 million theft

Corporate executives are typically tried for federal crimes, such as securities fraud, embezzlement or money laundering.

Kozlowski and Swartz are in state court in part because their case started out as a state investigation of Kozlowski for evading more than $1 million in New York sales taxes on purchases of paintings by Monet, Renoir and others.

Another explanation has to do with efforts by state officials like Manhattan District Attorney Robert Morgenthau and New York State Attorney General Eliot Spitzer to play big roles in government efforts to crack down on corporate corruption.

Under New York state law, Kozlowski and Swartz face 30 years at most in prison. If they get six years or more, they'll automatically be sent to a maximum security prison under New York state prison rules.

Linda Foglia, a spokeswoman for the New York State Department of Correctional Services, said Tuesday that the prison assignments for Kozlowski and Swartz won't be known for awhile yet.

Their sentencing is tentatively scheduled for August 2, but some criminal defense lawyers say that date will likely be delayed as lawyers for Kozlowski and Swartz maneuver to keep them out of prison for as long as possible, if not permanently.

Typically criminal defendants are immediately hauled off to prison once they're sentenced. It's possible that New York State Supreme Court Judge Michael Obus, who presided over their trial, could allow Kozlowski and Swartz to remain free pending the outcome of their appeals.

If not, Kozlowski and Swartz will be taken away from the courthouse in handcuffs. They'll spend about 4 to 6 weeks at an interim facility, possibly New York's infamous Rikers Island prison complex near Manhattan. Prison officials will test their mental and physical health, review their crime and punishment, and designate a prison based on those and other factors, including space availability, said Foglia.

Once imprisoned, Gourevitch said Kozlowski and Swartz won't get any special treatment.

Gourevitch said they could, out of safety concerns, ask for protective custody, which essentially means they would be separated from the general population. But Gourevitch said that protective custody, while safer, is not ideal.

It's difficult for inmates in protective custody to have visitors, he said. Worse, "you're kept with people who are either informants or stark-raving lunatics."  Top of page


Dennis Kozlowski
John J. Rigas
Corporate Scandals
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