A judge has allowed former Tyco Int’l Ltd. CEO L. Dennis Kozlowski and former CFO Mark Swartz to remain free on bail, pending a hearing on whether assets pledged for the bonds came from alleged multimillion-dollar fraud, reports the Associated Press. Prosecutors contend the money was stolen from the company and should not be used for their bail (a Sept. 27 hearing has been set to discuss the source of the money).

Kozlowski and Swartz were charged last week with enterprise corruption and grand larceny for allegedly stealing some $600 million from Tyco. They both face up to 25 years in prison on each of those charges if convicted.

Prosecutors filed criminal charges against the men soon after the Securities and Exchange Commission (SEC) accused them of hiding millions of dollars. The SEC says Kozlowski took $242 million from an employee loan program. Established to help workers buy Tyco stock, Kozlowski instead used the money to pay for yachts, fine art, jewelry, luxury apartments and vacations (this is separate from Kozlowski’s indictment in June on charges of evading New York sales taxes on $13 million in art.)

Additionally, Tyco’s former general counsel, Mark Belnick, was charged last week with falsifying business records to cover up $14 million in improper loans. He faces up to four years in prison if convicted.

Tyco itself has filed a lawsuit against Kozlowski seeking the return of his severance pay, along with his income and benefits since 1997—an amount estimated to be at least $250 million, reports The New York Times.

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