Kozlowski's $6,000 Shower Curtain Added to the ACFE Fraud Museum

Dennis Lynch, former Tyco VP and Chief Litigation Counsel, delivers the infamous shower curtain to ACFE Chief Operations Officer Jeanette LeVie.

Dennis Lynch, former Tyco VP and Chief Litigation Counsel, delivers the infamous shower curtain to ACFE Chief Operations Officer Jeanette LeVie.


Mandy Moody, CFE
Content Manager

Corporate greed at the executive level has destroyed hundreds of companies, drained stockholders of their investments and left innocent employees without work. Ken Lay, Jeffrey Skilling, and Andrew Fastow from Enron; Bernie Ebbers from MCI/WorldCom; and Dennis Kozlowski at Tyco have become household names, and too many exemplify what can go horribly wrong when the tone at the top goes askew.

Dubbed the “archetype of avarice” by The New York Times, Kozlowski could have written the book on how NOT to set an ethical tone at the top. This gold and burgundy shower curtain, which was hung in his maid’s bathroom at his residence on 5th Avenue in New York, was reported to cost more than $6,000.

However, his lavish lifestyle did not stop at bathroom décor. In 2001, he reportedly threw a $2 million Roman-themed party for his second wife’s birthday in Sardinia. According to the Times, Jimmy Buffet played the guitar and an ice sculpture of David was displayed urinating Stolichnaya vodka. He owned impressionist paintings and a 130-foot yacht that was originally built for the 1934 American Cup.

His empire came crashing down when he was indicted for tax evasion on a $14 million piece of artwork. This led to a larger internal investigation into his business practices at Tyco. In 2005, Kozlowski was convicted of stealing nearly $100 million from Tyco and was sentenced to a maximum of 25 years in prison. He served the minimum sentence of eight and a half years, and was released in 2014.

You can view the shower curtain in all its glory at the upcoming ACFE Global Fraud Conference in Nashville, June 18-23, in the Traveling Fraud Museum Exhibit. Remember, you can still save $100 if you register by May 10!

Why No Top Execs Prosecuted After the Great Recession?


James D. Ratley, CFE
ACFE President

In the last 30 years, we've seen top executives prosecuted during the S&L debacle, the junk bond scandal, Enron, WorldCom, Tyco and other monumental crimes. However, we never saw prosecutions of any high-level execs after the recent Great Recession. Why?

Jed S. Rakoff, U.S. district judge for the Southern District of New York, says in Fraud Magazine's most recent cover article that the reasons for the government's lack of prosecutions ranged "from the diversion of FBI agents to other priorities to prosecutors' increasing unfamiliarity with how to pursue such cases."

But two primary reasons stand out, he says. "First, beginning in the late 1990s, the Department of Justice became increasingly enamored with the vague — and in my view misguided — notion that prosecuting corporations instead of individuals would affect a change in ‘corporate culture' that would make companies more law-abiding," says Rakoff, a keynoter at the upcoming 27th Annual ACFE Global Fraud Conference, June 12-17 in Las Vegas.

"Second, and probably most important, prosecuting companies is easy — because companies ultimately have to settle or face potential ruin — and enables prosecutors to trumpet quick successes without employing substantial resources or courting defeat," he says.

In a November 2011 ruling, Rakoff tossed out a settlement between the Securities and Exchange Commission (SEC) and Citigroup that allowed the firm, without admitting guilt, to pay a $285 million fine for allegedly selling a billion-dollar fund filled with toxic mortgage debt. On June 4, 2011, the Second Circuit Court of Appeals overturned the Citigroup ruling. But Rakoff was able to say his piece.

In his opinion, he wrote, "The SEC's long-standing policy — hallowed by history, but not by reason — of allowing defendants to enter into consent judgments without admitting or denying the underlying allegations, deprives the court of even the most minimal assurance that the substantial injunctive relief it is being asked to impose has any basis in fact. …

"In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth," Rakoff wrote.

Read Rakoff's full interview on Fraud-Magazine.com.

The ACFE, during the 27th Annual ACFE Global Fraud Conference, will present Rakoff with the Cressey Award.

The Fraud Examiner: Past, Present & Future


By Dick Carozza, CFE
Editor-in-Chief, Fraud Magazine

Don’t you love it when a long shot works? You plan a project for months or years, line up your resources, set your launch date and then — omigosh — it succeeds.

That’s how Dr. Joseph T. Wells, James D. Ratley and Kathie Lawrence began the ACFE in 1988: with a novel idea, lots of late nights and a bunch of hope. You know how well that turned out.

To help celebrate the ACFE’s 25th anniversary, I wrote the cover article for the September/October Fraud Magazine, “Second generation creates its own history.” (Part 2 will be in the November/December issue.)

We asked veteran fraud examiners to give us names of young, promising CFEs in their 20s and 30s who are beginning to make a mark in the profession. And we then asked them questions on a wide range of fraud topics.

These young CFEs are impressive! Many are already edging into senior positions and some even own and manage firms. And they know they have advantages that the first generation of CFEs didn’t have.

Back in 1988, lonely auditors and accountants were trying to fight fraud in a system that wouldn’t even recognize the word. In fact, back then fraud was referred to as “irregularity.” Now, young CFEs are steeped in fraud examination principles they’ve learned from their battle-scarred CFE mentors, ACFE training and higher-education classes afforded through the ACFE’s Anti-Fraud Education Partnership.

“Fraud has been on the minds of industry professionals for at least a decade, especially in light of major fraud schemes like Enron, Tyco, Adelphia and WorldCom,” says Chris Ekimoff, CFE, CPA, CGMA, MAFF, vice president with Duff & Phelps, LLC, in the article. “Now that most professionals are more aware of the risks of fraud in their business, the role of this second generation may be to formalize and actualize plans to mitigate those risks.”

I get the sense that these young CFEs thoroughly comprehend that they have a serious responsibility to assume the mantle of the trailblazers. This movement could have died in its genesis. But ACFE leaders and the faithful fought institutional resistance because they knew so much was at stake. The second generation knows they can’t drop the ball.

“The public is fed up with the greed, financial fraud and the abuse of the public trust,” says Jeff Windham, J.D., CFE, senior forensic analyst and general counsel with Forensic Strategic Solutions, P.C. “The ‘golden age of fraud’ from approximately 1980 through 2010 is no longer en vogue. The public is mad, fearful and less trusting than it has ever been. And, thanks largely to the pioneering integrity of the first generation of CFEs, today’s CFEs have a higher position of trust and respect than ever before.”

Get to know these young CFEs. Their views might give you part of the picture of the fraud examination profession in the next quarter century.