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Dinulos, Lyzza May A.BSA-4Scandal(2002)When was the alleged fraud discovered?Tyco’s financial accounting first came under review in January 2002 after a tip suggestedthat a less-than-legal transaction might be taking place. In June of the same year, Kozlowskiresigned just before he was accused of tax evasion on some expensive art purchases, allegedlymade with company funds. On September 12, 2002, the SEC formally charged Kozlowski,Schwartz, and Belnick of civil fraud.What types of fraud are the men accused of committing?The SEC and Tyco International have indicted the former executives on charges of civil fraudand theft. They are accused of giving themselves interest-free or low interest loans for personalpurchases of property, jewelry, and other frivolities. According to the SEC, these loanswere never approved or repaid.Kozlowski and Schwartz are also accused of issuing bonuses to themselves and other