Greed-to-Grief

The first in a series

George Pillari
April 24, 2025

This is the first in our series, Greed-to-Grief, which tells stories of greed gone wrong. Greed-to-Grief stories will show up in our newsletter from time to time.

Greed-to-Grief, No. 1

Dennis Kozlowski was CEO of Tyco International from 1992 to 2002. He transformed Tyco from a modest enterprise into a global conglomerate through aggressive acquisitions.

Kozlowski's reign at Tyco was initially characterized by remarkable business success. Under his leadership, Tyco's revenue grew from $3.0 billion to over $40.0 billion, and its workforce expanded to 240,000 employees across more than 100 countries.

His reputation as a savvy dealmaker earned him accolades, including being named one of the Top 25 managers by BusinessWeek.

Dennis Kozlowski

Greed

Grief

A wise man once said, “It’s the little ones that will kill you.” And this is what happened to Kozlowski. At the time he started personally investing in art, Kozlowski was worth more than $500 million.

When he purchased certain pieces of art, he would have empty boxes shipped to tax-friendly New Hampshire, while the artwork was sent to his company-funded $30 million New York apartment.

New York tax regulators picked up on the scheme and Kozlowski was in hot water for evading more than $1.0 million of New York taxes – pocket change for him, but his greed got the better of him and the tax thing was like pulling a piece out of the bottom of a Jenga puzzle.

As a high-flying CEO in a high-flying company, nobody asked many questions. Remember one of my favorite sayings? Something was broken, but nobody dared fix it.

Why bother? Board members, officers, employees, bankers, and anybody else near Tyco was getting rich.

The beer money he saved on artwork taxes triggered broader investigations into his spending and behavior at Tyco. He famously spent $2.0 million on his wife’s birthday party in Sardinia, which featured an ice sculpture of Michaelangelo’s David, complete with vodka flowing from its penis.

Prosecutors would later document that Kozlowski, along with former CFO Mark Swartz, had stolen approximately $150 million from Tyco and obtained $430 million through fraudulent stock sales.

By September 2002, Kozlowski was indicted on charges of looting Tyco of $600 million. Looting! Gotta love it.

In June 2005, he was convicted on 22 counts of grand larceny, conspiracy, securities fraud, and falsifying business records. Kozlowski served more than eight years in prison.

The path from Greed-to-Grief

One of the easiest paths to go from greed to grief is taking unnecessary risks. Kozlowski was on the top of the business world, and he committed a blatantly fraudulent series of transactions to avoid taxes that were equal to a week’s worth of interest from his bank account.

His success, or the illusion thereof, damaged his ability to think rationally and gave his enemies and opening with the New York tax investigation. Did he think that everything he did was magic and would always work?

How about an advisor or lawyer to tell him, “Shipping empty boxes to a tax-fee state to avoid paying New York taxes is a stupid idea?” It was not going to happen.

Kozlowski grew up in a home of modest means. Some say that because of this, he was ill-prepared to handle his wealth and fame. An excuse I don’t buy.

I think Kozlowski was on the hamster wheel. He needed to continue acquiring companies, making Tyco bigger, and increasing his cash and stock-based compensation.

There is never a good time to get off the hamster wheel. If Kozlowski announced he was retiring, investors would suspect something was wrong and would sell-off Tyco stock. In the minds of investors who drove up the value of Tyco’s stock, Kozlowski and Tyco were one-in-the-same. He needed a long-term succession plan, but he was a short-term thinker.

Kozlowski greed-driven rise was swift, but so was his grief-stricken fall.

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