Notch a few more for the good guys, or at least the shareholder-at-large. Last week, Dennis "whizzing David" Kozlowski, former CEO of Tyco International (NYSE:TYC), and ex-finance chief Mark Swartz were convicted of multiple criminal counts including larceny, conspiracy, fraud, and falsifying records. All told, they siphoned a reported $600 million out of the firm. Their convictions aren't enough to restore investors' losses, either in cash diverted to Kozlowski's shower-curtain budget or subsequent losses in stock value. But at least the verdict is something.

As you may remember, Kozlowski and Swartz got a brief reprieve when the first case resulted in a mistrial after a juror reported receiving threats. This time around, the jury took 11 days to come back with the guilty verdicts. That's good news, because as obvious as it was that Kozlowski and Swartz had their hands in the shareholders' cookie jar, it's still notoriously difficult to land convictions for such corporate misdeeds, especially when the standard for conviction means convincing a jury not only that the money was "misappropriated," but also that those doing so knew it was wrong.

In cases like this, I always wonder whether there were any smoking guns that could have saved investors the misery. In some examples -- Hollinger International (NYSE:HLR), or even MCI (NASDAQ:MCIP) back when it was WorldCom -- you might argue that the warning signs were all there, easily accessible to anyone reading carefully. I'm not so sure that anything in Tyco's filings could have given away the top insiders' fiscal rampage.

The obvious place to look -- besides Kozlowski's bathroom -- would have been the proxy statement. The DEF 14A is where all the dirty laundry appears. Granted, it's usually well-hidden, but there's usually enough evidence to pique your curiosity. The section detailing "related-party transactions" is the source for real dirt.

Hindsight makes it easy now, but the clue that something was rotten in Tyco's Denmark might have been the recurring pattern with the firm's loan program -- one meant to give executives low-cost loans to pay tax on stock-compensation plans. By the end of the fiscal year, the reported amount Kozlowski and Swartz owed was typically zero. Yet the very next sentence would alert you to the huge amounts the pair owed at some point during the fiscal year. For Kozlowski, the sums were $52.7 million in 1999, $12.7 million in 2000, and $23 million in 2001, and there was no effort to explain how, or when, these significant sums were repaid.

Of course, we know now that they may not have been repaid at all. The rub was that big loans at Tyco were just forgiven, with or without knowledge of the board, or anyone else. Forgiveness seems to have been a principal theme at Tyco, but most of it was done on the sly. Indeed, in the case of a $19 million Boca Raton mortgage loan from 2002 that Tyco subsidiary TME forgave, the contract required that Kozlowski keep everything secret.

Unfortunately, in this case, the curious doin's in the filings would not have given away the scheme, which is why the convictions are so important. As much as we'd like to be able to protect ourselves, sometimes we need the courts to do it for us. Let's hope the upcoming sentences establish a very firm deterrent for future would-be corporate crooks. I think 30 years ought to be about right.

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Seth Jayson hopes there's a special prison shower waiting for Dennis Kozlowski. Maybe something with a pretty curtain. At the time of publication, he had positions in no firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.