What a blow for an executive who might as well have been called the Teflon CFO. For two years, Swartz has had to live with almost non-stop questions about how his company and its books have been managed, and up until June 4, when Kozlowski was arrested for tax fraud, it was looking like Tyco and its executives might escape with just a battered stock price.

Suddenly, at least a few people are wondering how the guy in charge of the books didn't know that some folks had their hands in the till. "Things were going on around him that suggest that at best he was asleep and at worst maybe he was involved," says J. Edward Ketz, an accounting professor at Pennsylvania State University's Smeal College of Business. Joe Morrison, an ABN Amro debt analyst, concurs: "It's hard to believe that there was a lot of raiding of the petty cash going on in the executive account, and he was unaware of it. There certainly were things going on there at Tyco that he should have known about."

Both Tyco and Swartz himself, through a company spokesperson, declined to be interviewed for this article.

Although Enron Corp. has received credit for the dubious honor of inaugurating the current rash of accounting scandals, it was really Swartz's work handling the accounting for Tyco's $64 billion acquisition spree that was the first to catch federal regulators' attention. In late 1999, not too long after Tice's Dallas-based firm raised red flags about whether Tyco's purchases were really as accretive to earnings as Swartz and Kozlowski had always claimed, Securities and Exchange Commission accountants began combing through the company's books. One neat trick alleged: Encourage takeover targets to take big pre-merger write-offs. The company dodged that bullet when the commission took no action and closed the investigation in July 2000.

Heartthrob of Media and Investors

Even though the concerns lingered, and Tyco's stock could never regain its heights, Swartz remained a poster boy for the brash, youngish crew of financial engineers who made their names in M&A or IPOs. His compatriots were executives such as Enron's Andrew Fastow and Scott Sullivan at WorldCom Inc. Much of the investment community loved him, and he was still being lionized in the business press as one of the nation's best CFOs. And short of that, he certainly continued to be one of the best compensated. In 2000 he took home an astounding $48 million; a year later in the midst of a recession, he still pulled in at least $21 million. Even this year, as the company briefly pondered splitting itself in four and making Swartz CFO of a unit half as big as $36 billion Tyco, the board awarded him unrestricted shares worth $24 million that would vest in January 2006, regardless of the company's performance in the intervening years.

The collapse of its stock price and the surprising evaporation of its once-touted cash flow has forced the company to resort to using $14.4 billion in bank credit lines and selling off assets. The problems with cash flow reflect particularly badly on Swartz, who argued consistently that the company's acquisitions had beefed up its cash. Ditto for the revelation this spring that he had failed to disclose $8 billion for 700 or so minor acquisitions. Fed up, one of Tyco's largest shareholders, David Dreman of Dreman Value Management, began calling in June for Swartz to resign.

Another big threat to Swartz's tenure is the posture of the rating agencies after Tyco recently finished its $4.6 billion spinoff of its CIT financial unit. Normally, such a move should substantially enhance a company's credit rating, taking some of its $26 billion in debt off the books and replenishing cash coffers. But all three ratings agencies declined to elevate Tyco's current below-investment-grade rating, and both Standard & Poor's Corp. and Moody's Investors Service specifically cited concerns over the company's corporate governance and the current investigation by the Manhattan D.A. Still, even here criticism of Swartz is tempered. "There's no reason to think he hasn't done a good job at Tyco, but he's tied closely to Kozlowzki, and the board may want to make a complete break when they bring in a new CEO," suggests analyst Eric Ause of Fitch Ratings. In fact, the board chose not to tap Swartz for an interim executive committee.

Swartz's resilience and the speed with which he made it to a top post are a bit baffling to some finance experts. In many ways, says Penn State's Ketz, "He's underqualified for the job, it would seem. I've seen people go from liberal arts backgrounds to high positions in finance, but usually they have to work their way up. It looks like what Kozlowski wanted, in hiring Swartz, was a yes man."

But these days questions from any CEO are hardly Swartz's biggest headache.