Life Without a Jet, and Other Laments
By ANDREW ROSS SORKIN
The New York Times
December 15, 2002
IT was just another guys' night out on Nantucket. A group of locals, year-round islanders, had gathered for their weekly poker game. At the table were a pair of fishermen, a signmaker, a retired doctor. And L. Dennis Kozlowski.
Since last spring, when Mr. Kozlowski, the former chairman of Tyco International, was charged with looting the company of more than $600 million, the invitations to hobnob with captains of industry at exclusive clubs and on the charity-ball circuit have disappeared. Gone, too, are the accouterments of the executive suite — the personal assistants, the limousines, the fleet of corporate jets.
"I was just at Walgreen's last week," Mr. Kozlowski said during a telephone interview last week, a store he hardly frequented as a chief executive. Reflecting on his reduced circumstances, he added: "I try to fill my days with nonrevenue-producing things," like working on his defense and volunteering for local charities. Perhaps most important, he said, he was "getting a handle on my own personal finances," which he has not managed in years and which have been frozen by a judge. These days, he must seek permission to spend any money whatsoever.
When he travels, he is now flying coach.
Other former top executives are rediscovering life without the company plane, too. Twelve months of scandal have turned a dozen or so of them into symbols of what is wrong in corporate America. They have been blamed for creating the stock market's crisis of confidence. Some, disgraced by criminal charges, were led away in handcuffs and perp-walked before cameras; others, under investigation but not yet charged, were excoriated in Congress and in the news media.
And then what?
For most of these executives, the specter of negotiations, trials, probation, prison or other similar unpleasantness still lie ahead. Their lives are in limbo.
"You're dealing with a psychological problem as much as anything else," said Stanley Sporkin, a former federal judge and top enforcement lawyer at the Securities and Exchange Commission. "A lot of these people are going through depression."
Some of them say they are finding out who their friends are. Many have had passports confiscated. "My life has changed dramatically," said John J. Rigas, 78, the founder and former chairman of Adelphia Communications, the cable company, who has been charged, along with his two sons, of pillaging $1 billion from the company.
It may be hard to feel sorry for people who have caused so much pain for investors, employees, creditors and others — especially because they themselves have suffered very little real pain, at least so far. Many are almost leading their normal, pre-scandal lives — minus the office.
Andrew S. Fastow, the former chief financial officer of Enron who is under indictment on fraud charges, for example, has been seen on his regular jog around the track at Rice University near his home in Houston. Mr. Fastow still coached his son's baseball team, the Houston Gators, part of the Tadpole Little League; he still participates in his children's carpooling, friends say, and he still takes out his 18-foot Boston Whaler on weekends to go fishing with his sons.
He has also become more religiously active at his temple, Congregation Or Ami, a conservative synagogue.
Meanwhile, Scott D. Sullivan, WorldCom's former chief financial officer, continues construction on his 24,000-square-foot megamansion in Boca Raton, Fla. Mr. Sullivan was indicted on charges that he conspired to hide billions of dollars in losses at the company.
Like the others, of course, "he is working on handling his litigation," said Irving B. Nathan, his lawyer. "That is his main preoccupation."
Still, Mr. Sullivan is regularly seen zipping around town in his silver Range Rover on his way to inspect that $15 million construction project, which includes an 18-seat movie theater, a private art gallery and a lagoon.
While Mr. Sullivan may not be safe from jail and civil lawsuits, his new home is secure; even if he is forced to file for bankruptcy, Florida's Homestead Act could protect the home and the land from creditors.
"Some of these guys have been living high off the hog for so long that it is hard to come back," Mr. Sporkin said.
For those whose lives have changed significantly, the most concrete alteration has been a curbing of their movement and spending. Mr. Kozlowski, Mr. Fastow and Mr. Rigas face travel restrictions. So does Mark H. Swartz, Tyco's former chief financial officer, who, with Mr. Kozlowski, is accused of plundering the company.
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But they are not trapped: Mr. Kozlowski can travel in Massachusetts, New York and Florida, where he has multimillion-dollar homes. He also received permission to travel with his family to his chalet in Beaver Creek, Colo., for Christmas to ski.
Mr. Rigas can travel between Pennsylvania and New York, though he complained in an interview that he missed a planned trip to France and Greece because he cannot leave the country.
Mr. Swartz, who lives in Boca Raton, may travel only between Florida and New York, which he visits to see his lawyer. He received permission to travel to California for the holidays to visit his in-laws. Mr. Sullivan is limited to Florida, Washington, Mississippi and New York.
ON the spending front, Mr. Kozlowski must submit receipts for every penny he spends, including the most recent electricity bills for homes on Nantucket ($726.46), in Florida ($1,047.26) and in Colorado ($267.57) and his itemized $7,200 credit card bill. "It's not a whole lot of fun," he grumbled.
Mr. Rigas's assets have also been frozen by the judge overseeing Adelphia's bankruptcy, though he was given permission to spend "reasonable" amounts to maintain his day-to-day life.
Oddly, the one disgraced executive who feels as if he is under house arrest, associates say, has not been charged with a crime, at least not yet, let alone found guilty. Jack B. Grubman, the former star telecommunications analyst at Citigroup's Salomon Smith Barney who is the focus of regulatory and prosecutorial scrutiny, can hardly leave his town house on the Upper East Side of Manhattan without being chased by television reporters or occasionally cast disdainful glances by passers-by, friends say.
On the day after WorldCom restated its earnings by $3.8 billion last June, Mr. Grubman was famously chased down the street outside his home by a CNBC reporter, a scene that the network now uses in its promotional commercials. Several weeks back, Mr. Grubman was trailed by another camera crew, this time for "20/20" on ABC, as he strolled through Central Park.
He spends several days a week in marathon sessions reviewing documents with his lawyer, Lee S. Richards, at his office in Chase Manhattan Plaza in Midtown Manhattan, associates said.
Mr. Grubman no longer feels comfortable, either, dropping off and picking up his twins at their nursery school run by the 92nd Street Y. He leaves that duty to his wife or the family nanny, friends said. Being seen around the nursery school has been an especially touchy subject for Mr. Grubman since news reports that he had boasted in an e-mail message that his former boss, Sanford I. Weill, the chairman of Citigroup, had helped secure spots at the nursery school for his two children after Mr. Grubman began recommending that investors buy AT&T stock.
Mr. Grubman declined to comment through a spokesman, citing the New York attorney general's continuing investigation of analysts.
Mr. Rigas, too, has been reluctant to leave home. "I've kind of withdrawn," he lamented. He said he made a rare outing in his hometown of Coudersport, Pa., last week to see "My Big Fat Greek Wedding" at the local movie theater, which he happens to own.
But when he does go from his home into downtown Coudersport, where he is considered the patriarch of the 2,650 residents (of which 1,500 are Adelphia employees), he is often rushed by townspeople who remain supporters. "You know what? I don't know how to express this with enough emotion, but when I'm in town, the people that used to give me a wave, now they come up to me and give me a hug," he said. "That's extraordinary."
In October, Adelphia sent a three-page memo to employees entitled "Contact With Members of the Rigas Family," dictating how they should, or rather should not, communicate with the Rigases if they run into them. The company said that if any of its 1,500 employees come into contact with them, they must "report all such contacts to the legal department." Or if they get a phone message, the memo directs them: "Do not attempt to return the phone call."
Mr. Rigas, who has no contact with the company's new management, said the memo was hurtful. "It was devastating to me," he said. Still, he has kept up with many of the company's current and former employees. Adelphia let go about 150 employees locally this fall. "A lot of people have been laid off and they have made sure to call me," he said.
MR. KOZLOWSKI, too, has been encouraged by occasional well-wishers. At a movie theater a couple of weeks ago, "a guy came up to me and said he was a Tyco shareholder and believed in me," he said.
But neither he nor other disgraced executives canvassed for this article seem to be garnering much attention when they are in public. Mr. Kozlowski said that, with the exception of "tabloid people" stalking him over the summer in Nantucket, he goes mostly unnoticed.
Mr. Rigas said that he worried about being noticed when came to New York, but was not. "Nobody recognizes me despite all the publicity," he said. "So that's fine."
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Mr. Kozlowski said the most difficult part of his newfound circumstances has been dealing with friends. He acknowledged that some people he had considered friends had deserted him. "You can sort out who you friends are," he added, saying that he has become even closer with his core group of friends.
Mr. Kozlowski said he had noticed a "reverse relationship" with people to whose charities he had given money. "Some of those people have vaporized," he said, observing that the more money he had given, the quicker they had turned on him.
For Mark A. Belnick, Tyco's former general counsel, who has been charged with falsifying company documents to conceal unauthorized pay, it was some students who turned on him. Aside from stewing over his legal case, Mr. Belnick continues in his part-time job as the director of Cornell University's prelaw program. During the summer, he taught his regular class, Government 315 — "Introduction to the American Legal System: Its Nature, Functions and Institutions," though he did cancel two weeks of the eight-week program while he dealt with his indictment.
While students still rave about Mr. Belnick as a teacher, the campus paper, The Cornell Daily Sun, wrote an editorial seeking his resignation and criticizing the university for allowing him to teach while under indictment. "Although the case has yet to go to trial, the circumstances of Belnick's employment with Tyco International and his role with Cornell render him a threat both to the university's reputation and the students he mentors," the newspaper wrote. "Cornell is taking an unnecessary risk in allowing Belnick to continue on staff." Mr. Belnick's lawyer, Reid H. Weingarten, declined to comment.
Kenneth L. Lay, Enron's former chairman, has been equally active. He and his wife, Linda, have become increasingly visible on Houston's social and charity circuit, recently making an appearance at a fund-raising dinner for the United Way at the home of Gordon M. Bethune, the chief executive of Continental Airlines. Friends say they did, however, leave early.
Mr. Lay spends most days at his private office near his apartment in the Huntingdon high-rise in River Oaks, a Houston suburb. After he resigned from Enron a year ago, he rented the office so he could work on his pet charity projects, like the Greater Houston Partnership, where he is board member, and to examine new investment opportunities in the energy sector, according to his spokeswoman, Kelly Kimberly.
Occasionally, Mr. Lay stops by his wife's store, Jus' Stuff, which sells furnishings, antiques and decorative items from, among other places, the 14 homes and investment properties the Lays recently sold, including their Aspen ski house.
Jeffrey K. Skilling, who for six months in early 2001 succeeded Mr. Lay at Enron and then abruptly quit, has also stepped outside his gated mansion. He has been spotted with friends at several trendy restaurants and bars, like Zimm's and Martini & Wine. Once, recently, he was harassed at a restaurant, another diner said.
E is also back in business, sort of: he has started an investment firm called Veld Interests and has leased space in Greenway Plaza, an office complex in the upscale Galleria shopping area.
Bernard J. Ebbers, the former chief executive of WorldCom who is under investigation, has been spotted regularly at his favorite restaurants, Tico's and Dixie Springs, in Brookhaven, Miss., where he lives, about an hour from Clinton, where WorldCom is based. He also teaches Sunday school for an hour every week at his Easthaven Baptist Church there.
Like other humiliated executives, Samuel D. Waksal, the former chief executive of the biotechnology company ImClone Systems who pleaded guilty to insider stock trading and is awaiting sentencing, has stepped up his do-good activities. Mr. Waksal has been quietly volunteering daily at a nonprofit organization in SoHo, near his home, that teaches skills to homeless people to enable them to enter the work force.
Good deeds, of course, have been known to influence a sentencing judge.
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