Tyco International

(TYC)

said it undertook a comprehensive investigation of how ousted CEO Dennis Kozlowski used company funds amid reports New York prosecutors would consider indicting the whole company, depending on the results of their own probe.

The news sent Tyco's shares down $2, or almost 14%, to $12.60 in Instinet premarket trading.

New York prosecutors want to know if Tyco used corporate funds to buy homes and art for top executives without telling shareholders,

The Wall Street Journal

reported. If they determine it did, Tyco and its officers could face charges including income-tax evasion and keeping false books. Kozlowski allegedly borrowed money from a stock-loan plan to buy more than $13 million in art. He faces a 12-count indictment alleging income tax evasion.

Tyco divulged its own investigation in a press release in which it also reaffirmed its commitment to spinning off its CIT Financial unit.