New York prosecutors have secured their first guilty plea in a mammoth securities fraud case against ousted Tyco ( TYC) insiders. Frank E. Walsh, Tyco's lead director until February, agreed Tuesday to pay $22.5 million to settle charges that he violated New York's general business law. Walsh pleaded guilty to the charges after he was arrested Tuesday by the Manhattan district attorney's office for collecting $20 million in undisclosed fees for his role in Tyco's $9.5 billion acquisition of the CIT financial services outfit last year. Tyco has since spun off CIT in an initial public offering that raised less than half the sum Tyco originally paid for the company. The company divested itself of CIT amid a perilous summer liquidity crisis, from which Tyco emerged only after a wholesale management change and a promise to revamp its governance setup. Even now, with the stock having doubled off its summer lows, investors have lost billions of dollars betting on Tyco stock in recent years. Walsh must now repay Tyco his entire acquisition fee -- half of which Tyco donated to a charity in Walsh's name -- in addition to a $2.5 million fine. Without a settlement, Walsh could have faced up to four years in prison or a $40 million fine. The spotlight in the Tyco case will now turn to the other executives at the top of the company at the time of the CIT deal. Walsh's conviction stems from actions that began nearly two years ago, when Walsh learned about Tyco's interest in purchasing CIT -- a company in which he personally held a 50,000-share stake. In early 2001, Walsh offered to assist with the acquisition by arranging a meeting between former Tyco CEO Dennis Kozlowski and the CEO of CIT. Afterwards, Kozlowski secretly promised Walsh an investment banking or finder's fee if the acquisition prevailed.