Former Tyco chief executive Dennis Kozlowski has remained free on bail after a court accepted the $10m (�6.4m) bail put up by his ex-wife.

Mr Kozlowski had been granted bail, backed by either cash or Tyco stock, last week.

But prosecutors had alleged that the money used for the bail was tainted, acquired through illegal means when Mr Kozlowski was still at Tyco.

However, Manhattan Supreme Court Judge Michael Obus accepted the $10m bail and set a hearing date for 7 November.

Cash accepted

If the bail had been refused, Mr Kozlowski would have been sent to the jail at Riker's Island, an infamous New York prison known as one of the toughest in the New York state corrections system.

The judge said he was satisfied that the $10m cash put up by Mr Kozlowski's wife was part of their divorce settlement.

But the ex-Tyco chief financial officer Mark Swartz, whose $5m bail was backed with Tyco stock, was not so fortunate.

"The court is not satisfied that the stock offered here is acceptable," Mr Justice Obus said.

Mr Swartz now has until 11 October to prove that the money is not tainted.

Fall from grace

Mr Kozlowski was the head of Tyco from 1992 until June this year, and built the company up into a huge international conglomerate.

But now he and Mr Swartz are facing charges that they stole more than $170m from the company and defrauded investors.

It is alleged that Mr Kozlowski used company funds for lavish personal spending and forgave $96m in company loans to 51 employees, including himself.

If convicted, both face up to 25 years in prison.