NEW YORK (Bloomberg) ? Manhattan prosecutors say authorities collected some $35 million in unpaid state and city sales taxes because of publicity from the sales-tax case of former Tyco International Ltd. chief executive officer L. Dennis Kozlowski.

District Attorney Robert Morgenthau has been investigating transactions at art and antique galleries since Kozlowski was indicted in June 2002 for evading sales tax.

He was accused of falsely claiming that $13.2 million worth of paintings he bought in New York were shipped to tax-free New Hampshire, where Tyco had offices.

Prosecutors say Kozlowski had empty cartons sent to New Hampshire while the artwork, including paintings by Monet and Renoir, ended up in his Fifth Ave. apartment.

As news of the tax charges against Kozlowski surfaced, the district attorney?s office began receiving a ?wave? of calls from lawyers inquiring about clients who wanted to pay sales taxes they owed, said Dan Castleman, Morgenthau?s Chief of Investigations.

?We?ve collected more than $35 million, and it?s increasing every day,? Castleman said in an interview.

?We?ve taken more than a half-dozen guilty pleas from dealers to date. In the high- end art and antiques business, not paying sales tax is common.?

Kozlowski, who was convicted of fraud in June 2005 along with former Tyco chief financial officer Mark Swartz, pleaded innocent to the tax charges.

That case is pending, and a court hearing is scheduled on the matter for January 18, prosecutors said.

Prosecutors said it was their tax investigation of Kozlowski that led them to probe whether he and other Tyco executives misused company funds.

Kozlowski, 59, and Swartz, 45, have been in custody since September 19, when they were sentenced to 8 -to-25 years in prison. A state court jury found them guilty of stealing more than $150 million from Tyco by taking unauthorised bonuses and having company loans forgiven.

Kozlowski was accused of using Tyco?s money to buy artwork and lavish furnishings for his New York apartment and charging half the cost of a $2 million birthday party for his wife on the Italian island of Sardinia to the company.

The two men were also convicted of defrauding Tyco shareholders. Kozlowski and Swartz are being held at a state correctional centre in Fishkill, New York.

Castleman said prosecutors dubbed the revenue influx ?the Tyco dividend,? and that it continues to pump previously-unpaid millions into New York City and state coffers.

James Kindler, the Chief Assistant Manhattan District Attorney, said since 2002 more than 200 individuals and galleries have come forward to admit they either failed to pay or collect sales tax.

They?ve pleaded guilty to felony charges including failing to collect taxes and falsifying records, he said.

Sales taxes must be collected by the seller and paid by the buyer, Kindler said.

?There was certainly a spike initially in people reporting to the state that they owed back taxes,? Kindler said. ?I think the case made people aware that there?s going to be enforcement in this area.?

Prosecutors declined to identify individual customers who came forward and paid their taxes in the wake of the Kozlowski case.

Earlier this month, James Samsun, a New York City art dealer, was allowed to reduce his guilty pleas on felony charges of falsifying business records to misdemeanours, after he agreed to cooperate with prosecutors investigating tax evasion in the art world. Samsun had faced up to four years in prison for evading taxes, falsifying business records and stealing art work from his employer, L?Antiquaire and the Connoisseur, an art dealer on Manhattan?s Upper East Side. Instead, he paid $57,972 in unpaid taxes and was sentenced to three years? probation by a New York state court judge.

L?Antiquaire and the Connoisseur sold hundreds of thousands of dollars of antiques to Kozlowski?s decorator for his Manhattan apartment, prosecutors said.

In November, Samsun?s former boss, Helen Fioratti, who owns the gallery, pleaded guilty to state charges that she failed to collect hundreds of thousands of dollars in sales taxes since 1999. She was ordered last month to pay more than $600,000 in restitution. Tyco is the world?s biggest maker of security and fire systems, electronic connectors and industrial valves, and is the No. 2 maker of disposable medical products behind Johnson & Johnson.