• Tyco Inc. was founded in 1960 by Arthur J. Rosenburg • It is a diverse producing and serving corporation which was initially supported by government research & defense contracts • It became a publicly owned company in 1964 • It launched its IPO in 1974 and got Listed on NYSE in 1974 • Between 1982 and 2000 it undertook several subdivisions. Tyco has done business in over 1000 locations in 50 countries and hires 69,000 employees around the world. • Tyco had made numerous acquisitions over the years, including 40 acquisitions since the 1980s and has numerous companies among the Fortune 500 • The firm's revenue increased exponentially from $3.1 billion in 1992 to over $40 billion in 2004, with the firm's market value estimated at over $100 billion How did the Scam happen • According to the Tyco Fraud Information Center, an internal investigation concluded that there were accounting errors, but that there was no systematic fraud problem at Tyco. • Tyco's former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans (sometimes disguised as bonuses) that were never approved by the Tyco board or repaid. • Some of these "loans" were part of a "Key Employee Loan" program the company offered. They were also accused of selling their company stock without telling investors, which is a requirement under SEC rules • Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco International through their unapproved bonuses, loans, and extravagant "company" spending. • Rumors of a $6,000 shower curtain, $2,000 trash can, and a $2 million dollar birthday party for Koslowski's wife in Italy are just a few examples of the misuse of company funds. • As many as 40 Tyco executives took loans that were later "forgiven" as part of Tyco's loan forgiveness program, although it was said that many did not know they were doing anything wrong. • Hush money was also paid to those the company feared would "rat out" Kozlowski. • In 1999 the SEC began an investigation on accounting of acquisitions, including "spring-loading"- underreporting preacquisition earnings of an acquired company. However SEC took no actions. • In January 2002, a tip drew attention to a $20 million payment made to Tyco director Frank Walsh, Jr which was later explained as a finder's fee for the Tyco acquisition of CIT. • In June 2002, Kozlowski was investigated for sales tax evasion on $13 million in artwork that he had purchased with company funds. Post that, Kozlowski resigned from Tyco "for personal reasons" • Kozlowski, Swartz, and Bolnick were charged for failure to disclose information on their multimillion dollar loans to shareholders. • The SEC asked them to restore the funds in form of undisclosed loans and compensations. Consequences of the Scam on: • The Company The foremost and major challenge faced by the company was the loss that was incurred because of the whole scam.