PHILADELPHIA (CN) – An accounting manager claims Tyco Electronics “coercively” fired him for objecting to its “fraudulent accounting,” including a $350,000 company shindig at the Atlantis Resort in the Bahamas. Jeffrey Wiest claims Tyco’s exorbitant bashes for its CEO Thomas Lynch and other top executives “were almost identical to parties for which Tyco’s former CEO [Dennis Kozlowski] was criminally charged and convicted.”
Wiest, 54, says in his federal complaint that he “was amazed that his superiors authorized an island party with disturbing similarities to the past issues raised under Dennis Kozlowski, such as the Roman party with the ice sculpture of David and the $6,000 shower curtain.”
Kozlowski’s “Roman Orgy” party made national headlines in 2003. Kozlowski is serving 8 years in federal prison for fraud and grand larceny.
Wiest, a 31-year veteran of Tyco’s accounting department, says that expenses for the Bahamas bash he refused to approve included “$3,000 for ‘mermaid greeters’ and ‘costumed pirates/wenches'”.
He adds that the expenses for that one party would have paid salaries and benefits for seven workers for a year in the accounts payable department he managed.
Wiest says that in 2008 he “refused to process a payment and sent a note to his management questioning the legitimacy of a $350,000 event being held at the Atlantis Resort in the Bahamas. Wiest, as was virtually everyone else at Tyco and in the world, was cognizant of a similar party under Dennis Kozlowski’s management. He did not want to be any part of a repeat occurrence.”
Wiest claims that a subsequent examination “determined that there was only one 1.5-hour business meeting during the entire five-day event” and that processing the transaction would have caused a fraudulent tax deduction “since it was being submitted as a business expense but clearly did not qualify as such.”
The complaint adds: “(E)xpenses that raised particular concerns for the Atlantis party were: $3,000 for ‘mermaid greeters’ and ‘costumed pirates/wenches’; $2,350 for a ‘tattoo artist (includes tattoos)’ and ‘limbo’ & ‘fire’ dancers; $2,500 for ‘chair covers and sashes’ and some rooms for over $1,000 per night, with the least expensive costing $475 per night.”
The complaint adds: “This requested payment seemed particularly inappropriate from a morale aspect, coming in the midst of continued downsizing pressure, and seemed contradictory in that this one party equated to approximately seven positions for one year in the accounts payable function managed by Wiest,” according to the complaint.
Wiest says that despite his objections, “it was decided to go ahead with the event, to treat the proportionate share of the party as income, and to ‘gross-up’ the bonuses to the employees involved. In other words, the company would pay each highly paid employee an additional amount of cash beyond the value of the trip in order to cover his/her tax liability.”
This approach brought “the total cost of the event to approximately a half million dollars,” according to the complaint.
He claims that each high-ranking Tyco employee was awarded up to $7,500 per person, or $15,000 per couple, as additional “income,” for attending the party. All of the 30 employees who attended were receiving salaries of more than $102,000, Wiest says. He adds that 23 of them took their wives.
Wiest says he also was asked to reimburse expenses for two other conference-type events that lacked proper accounting and tax information.
“The first of these occurred in mid-2008 at the Venetian Resort in Las Vegas, NV with an associated cost of $218,000, not including the attendees’ travel expenses,” according to the complaint. “The second event was held in late 2008 at the Wintergreen Resort in Virginia and cost $355,000, not including individual travel.”
Wiest says questions also arose about whether an employee’s baby shower could be considered a legitimate business expense.
“There was also a case of what appeared to be clear expense fraud on the part of a key employee that included duplicate entries and additional nights added to hotel bills, as well as undocumented expenses that were, very surprisingly, excused as poor record keeping errors.”
In response to his repeated questioning of these extravaganzas, Wiest says, Tyco began an “investigation” of him. This led to bogus accusations that he had made sexually oriented comments, Wiest says.
“Examples given included a comment to an employee going on a honeymoon cruise to not stay on the ship the whole time; a comment about his wife’s hormone issues during her pregnancy being difficult for him, and a comment regarding the uses of improved flexibility from working out. It is noteworthy that the hormone comment would have been several years old, as Wiest’s child was born in 2006,” the complaint states.
He claims Tyco also raised questions about a decade-old brief relationship he had had with a California-based Tyco employee, and baseball tickets that Wiest had been given by a superior.
Wiest seeks damages for wrongful firing, emotional distress, retaliation, harassment and discrimination for his adhering federal securities laws.
Named as defendants are Tyco Electronics; CEO Thomas J. Lynch; CFO Terrence Curtin; Charles Dougherty, president of Tyco’s wireless systems unit; and Tyco’s head counsel for human relations, Charles C. Post.
Wiest and his wife are represented by Richard Angino of Angino & Rovner in Harrisburg.
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