(FORTUNE Magazine) – It took only the quiet whoosh of two doors opening. Like a crowd at a wedding anticipating the arrival of the bride, the audience instantly stopped talking and wheeled around in their seats. There in the back of the drab New York City courtroom were former Tyco executives Dennis Kozlowski, Mark Swartz, and Mark Belnick. Hands behind their backs, the men stood tentatively, awaiting instruction from the detectives who accompanied them. Their faces offered contrasting colors: the head and neck of former chief executive officer Kozlowski were crimson; ex-chief financial officer Swartz looked improbably tanned; and former chief corporate counsel Belnick--dwarfed by the beefy Kozlowski and the lanky Swartz--was ashen. He looked stunned.

Once the detectives had paused just long enough to ensure that everyone in the room had taken in the spectacle, they removed the handcuffs and the three men seated themselves to await the formal charges against them. On that mid-September day Kozlowski and Swartz were answering allegations that sounded more appropriate for Mafia dons than for the erstwhile leaders of a giant corporation. "The defendants are charged with running a criminal enterprise," prosecutor John Moscow told the judge. The numbers were staggering: a 94-page indictment alleging enterprise corruption and 38 counts of grand larceny, conspiracy, and falsifying business records. The prosecutor accused the two of "simply stealing" $170 million from Tyco. Including stock sales, he alleged, their ill-gotten gains totaled a jaw-dropping $600 million. Kozlowski and Swartz pleaded not guilty and prepared to post astronomical bails: $100 million and $50 million, respectively.

By comparison, Belnick's arraignment seemed almost mundane. His separate three-page indictment charged him with falsifying business records; he had failed to disclose $14 million in loans from Tyco. Belnick, too, pleaded not guilty and departed with a comparatively modest $1 million bail.

Mark Belnick is hardly a marquee name in this year's gala of corporate scandals. He'll never make it into a Letterman monologue, and you're far less likely to see his mug shot in the business press than that of Kozlowski or Enron's Andrew Fastow or any number of disgraced former executives.

But it's precisely the limited scope of Belnick's alleged misconduct that makes his case such a telling prism through which to view the current epidemic of executive misbehavior. Even if you accept the prosecutor's view of the matter, the charges against Belnick don't approach the outlandish excess of Kozlowski--an excess whose epic scale seems more fitting for a Roman emperor, an excess that obliterates the average person's grandest fantasies of wealth. No, Belnick's temptations--though they involve large sums of money--were of this world. And in an age of corporate decadence, he was far from the only person to face the seduction of easy money. His is a story on a human scale, one that, more than anything, shows how even a handful of misjudgments--or less, perhaps--can sink an illustrious career.

The sums may have been smaller than those at issue in Kozlowski's case, but the tragedy is perhaps greater. Indeed, that Belnick, 55, should even be accused of misbehavior is shocking. How did this elite veteran lawyer--who has been involved in titanic business cases such as Texaco v. Pennzoil and the civil suits against Michael Milken; who had been a key lawyer for Congress's Iran-Contra committee; whose probity is vouched for by the likes of former Senator (and Iran-Contra committee vice chair) Warren Rudman and even by courtroom opponents--find himself in such a position? How did a man who is routinely described as brilliant and whose training--indeed, his metier--was supposed to be aimed at keeping his client out of trouble, land in a place where both the client and the lawyer were deep in trouble?

We should state at the start that much of what Belnick did and did not do remains a subject of sharp dispute. Tyco has sued him, lodging an array of charges that far exceed the limited scope of the Manhattan criminal indictment. The company charges Belnick with abusing his position as general counsel and essentially accuses him of being an enabler to Kozlowski and Swartz's wholesale pillaging of the company. The SEC has also sued him, but despite harsh language that accuses him of "looting" the company alongside Tyco's CEO and CFO, the specific SEC allegations against Belnick are restricted to his failure to disclose the loans the company made to him. Meanwhile Belnick's lawyer, Reid Weingarten--who answered questions for his client for this article--is vehemently protesting his client's innocence, arguing that Belnick was attempting to uncover misbehavior, not engage in it.

Given the wildly divergent accounts and the continuing investigations, the full truth isn't likely to be known for some time. But even if Belnick is cleared legally, the mystery will remain: How did he end up in this mess?

The dazed-looking Belnick in the courtroom--tieless and clutching a biography of John Adams that he read during his hours in custody--barely resembles the Belnick that the country saw the first time he trod the public stage. Back in the summer of 1987, many Americans were transfixed by the televised hearings of the joint House and Senate committee investigating the Iran-Contra scandal. Belnick, who was deputy to Senate counsel Arthur Liman, played a critical role in tracking down secret payments. And he grilled witnesses such as Secretary of State George Shultz and Fawn Hall, the Oliver North secretary who became the pin-up girl of the scandal. It was Belnick, for example, who elicited testimony from Hall that she'd not only helped North shred documents but also spirited papers out of his office in her boots and in the back of her dress.

To see video of Belnick in the hearings is to see a lawyer at the top of his game--confident, prepared, and methodically drawing Hall's story out detail by detail so that the nation could fully absorb her tale. Fellow committee lawyer Terry Smiljanich remembers Belnick as a "brilliant man" and a workaholic: "Gosh, he worked day and night."

Directly above and behind Belnick in the hearing room was Liman, who seemed to gaze down at his protege with pride. The two men were on leave from their prestigious New York law firm, Paul Weiss Rifkind Wharton & Garrison, where Liman had long established himself as a legal lion of national repute. It was Liman who had given Belnick, then 40, the opportunity of a lifetime. Indeed, most of his key early assignments, including roles in the multibillion-dollar legal war between Texaco and Pennzoil over the acquisition of Getty Oil, and the civil defense of Michael Milken, were cases in which Belnick assisted Liman.

Liman nurtured Belnick's development, and the two had a close working relationship until Liman's death in 1997. Belnick "was, in Arthur's eyes, truly brilliant," says Liman's widow, Ellen. For all the benefits of the relationship, though, and for all his success, Belnick would never escape the long shadow of his mentor--at least, not until the meltdown at Tyco.

Belnick, in fact, had seemed destined for prominence from an early age. Raised in Linden, N.J., the son of an accountant and an elementary school teacher, he attracted notice at Cornell University during the raucous late 1960s. While other college students demonstrated and agitated against the Vietnam war, Belnick pursued a more establishment-oriented course: In 1967 he organized a national student conference on the conflict, which earned him mention in the New York Times.

He continued his ambitious path at Columbia Law School--during which he had to cope with the trauma of the death of his younger brother from Hodgkin's disease--and then signed on at Paul Weiss after graduating in 1971. With Liman's backing, Belnick rose quickly to partner. Along with Liman's support came an education in the way a lawyer should conduct himself. Liman was seen as an ethical paragon, say lawyers who knew him, and Belnick was steeped in that approach. "Mark revered Arthur," says an attorney who worked with them at Paul Weiss.

Belnick was generally perceived as funny, personable, and ambitious. Even his critics acknowledged his legal ability and, yes, his ethics. Indeed, lawyers who have squared off with Belnick say they admire his integrity. "I found him to be fair, honorable, reasonable--a problem solver," says A.B. Culvahouse, who as White House counsel during the Reagan administration had to joust with Belnick over the White House's role in the Iran-Contra investigation.

"He was absolutely careful, ethical, and conscientious," says plaintiffs lawyer Mary Stowell, who represented women suing what was then Smith Barney for sexual discrimination in 1996 and who negotiated a settlement with Belnick. "He was very conscious of making sure everything was above-board and appropriate." Moreover, Belnick wasn't the stereotypical obnoxious New York litigator. "Let's face it," she says. "This is a group of women lawyers, women talking about sex discrimination.... And we were never talked down to, condescended to, never any disparaging remarks about [the plaintiffs]. He was respectful of other lawyers and the claimants."

By the 1990s, Belnick had risen to be a senior partner at Paul Weiss. He was handling big cases, working intense hours (billing as many as 3,000 in a year--significantly more than the 2,200 or so that sweatshop New York firms demand of associates), and taking home compensation that would exceed $1 million a year at its peak. But as he neared his 50th birthday, he seemed restless.

In 1993, Belnick decided to leave the firm and took a job as general counsel of his beloved alma mater, Cornell. Belnick had long been doing pro bono work for the university and had remained active as an alumnus. He seemed to be drawn back to the place that embodied his youth and to a job that would allow him to slow his life and spend more time with his wife, Randy, whom he'd been married to for 19 years at that point, and their three kids, then ages 17, 14, and 9. And if it meant taking a massive pay cut, so be it. Some things are more important than money.

That was the plan, anyway. Belnick announced his departure, drove up to bucolic Ithaca, N.Y., and embarked on his new job while preparing to move his family. There this attorney who was used to handling headline-grabbing billion-dollar cases found himself asked to offer his counsel on matters such as whether Cornell needed to install three bathrooms in a facility in order to comply with federal law. Belnick realized he'd made a mistake. It took just weeks for him to resign and return home.

His partners welcomed him back. "I don't think we ever turned the lights out in his office," jokes Paul Weiss partner Martin London. The embarrassment of Belnick's career zigzag quickly passed. He returned to his frenetic pace, taking on big assignments such as an internal investigation ordered by Woolworth's board over the company's accounting.

But Belnick's restlessness hadn't dissipated. And the news, a few years later, that Arthur Liman had been diagnosed with cancer seemed only to erode the certainties in his life. Liman's death in July 1997 devastated Belnick, who delivered an eloquent eulogy at the funeral.

Belnick had also been grappling with his spirituality. He had been president of the Jewish Community Center of Harrison, the affluent New York City suburb where he lived. He sometimes helped lead services and played a key role in recruiting a new rabbi to his conservative synagogue.

The religion was a constant in his life; it seemed to root him to the community. But all of a sudden, with no explanation, Belnick was no longer participating. The reason, when it emerged, shocked many who knew him: Belnick had converted to Catholicism. Friends who knew of the conversion say Belnick considers his faith a deeply private matter. Indeed, so much is this the case that a number of people interviewed for this article, who described themselves as friends, say they didn't know about Belnick's conversion until it was mentioned in the newspaper after Belnick's indictment.

Belnick may have considered his decision private, but he embraced a public leadership role at institutions with Catholic affiliations. He joined boards at the Catholic Foundation of Utah (where he now lives part of the year), and Thomas Aquinas College, a Catholic school in Santa Paula, Calif.

Belnick may not have spoken about his transformation, but a few friends noticed that something was different. "He wanted change in his life," says Warren Rudman, who became a partner at Paul Weiss after he left the Senate in 1993. Rudman offered to introduce Belnick to a New Hampshire CEO whom he knew and whose company was looking for a general counsel.

The CEO was Tyco's Dennis Kozlowski, who told Belnick that the rapidly growing company had reached a point at which it needed a world-class general counsel. In September 1998, Belnick signed on. The job offered him a new challenge--and the hours were nowhere near as brutal.

Moreover, Belnick was vaulting into the big time financially. Even in an era of wildly inflated corporate compensation, Tyco stood out, and Belnick was set to become one of its highest officers. He'd start with a guaranteed minimum of $2.5 million in salary and bonuses the first year, which could be augmented because there was an unusual provision guaranteeing that his bonus would be at least one- third of Kozlowski's. Then there were 100,000 shares of Tyco stock and 500,000 options, all of which would vest within three years. In the scalding stock market of the day, it wouldn't have taken much to translate those shares into tens of millions of dollars.

But that wasn't all. Belnick's agreement with Kozlowski also entitled him to participate in the company's relocation program, which would provide, in this case, interest-free loans so that Belnick and his family could move from Harrison to New York City, 25 miles away. The program was supposed to apply to existing Tyco employees who'd been forced to move when Tyco switched its headquarters from New Hampshire. That didn't include Belnick, but how could he know that? He was a new employee, and the chairman of the company had told him in writing that he was eligible. Belnick would borrow a total of $4 million under that program to relocate, buying and renovating an apartment overlooking Central Park.

To those who recall the late, great corporate gravy train, such a deal may not have sounded outlandish. It was simply the kind of outsized reward that flowed to corporate pashas in the days when extremism in the defense of perks was no vice and moderation in the pursuit of stock options was no virtue. But the agreement held the seeds of Belnick's downfall.

That wouldn't become apparent for several years, though. In the meantime, Belnick worked hard as general counsel--among other things successfully resolving a 1999 SEC investigation.

And he was enjoying Tyco's largesse. Including a performance bonus, an additional restricted stock grant, and copious stock sales, his total compensation was a mammoth $20 million in 2000, according to Tyco (which asserts that CEO Kozlowski didn't inform the board of most of these prodigious emoluments). There no longer could be any doubt: Belnick was rich.

Life at Tyco was affording him not only large sums of money but even a modicum of time. Belnick began teaching an intensive course entitled "Introduction to the American Legal System" for Cornell undergrads. Belnick would hold forth in Socratic fashion three hours a day, five days a week, for a month each summer. Students loved him. Belnick even used his connections at New York law firms to create an internship program in conjunction with the class.

By September 2001 the stormy markets had pummeled virtually every stock. A handful of critics had even begun murmuring about accounting issues at Tyco. No matter. The stock remained a calm, sunny oasis. Indeed, its price had doubled during Belnick's three years at the company. At Tyco, it seemed, the freewheeling '90s hadn't yet ended.

That's when Belnick made a fateful decision--perhaps it was even a snap decision with nary a premeditated thought. We don't know. But make it he did. Tyco's chief counsel dipped into the corporate cookie jar, availing himself of another interest-free relocation loan.

This time he borrowed $10 million to buy and renovate a home in Park City, Utah. Belnick's wife and son would live there full-time, while Belnick divided his time between Utah, New York, and frequent travel. Once again Kozlowski had okayed the loan, according to Weingarten. But Belnick was no longer a rookie at the company. He was now a three-year veteran. More important, as general counsel he was the person charged with making sure the company followed not only the law but its own internal rules. Belnick took the loan. According to Tyco, he didn't bother to fill out the company's relocation paperwork.

A few months later, in early January, Tyco's seemingly impervious stock began feeling the effects of kryptonite: a newsletter reported a possible new SEC probe into Tyco's accounting. Pressure mounted on Kozlowski. Previously consumed with acquisitions and growth, the CEO floated a plan to split the company into four pieces. For the first time, it appears, people began paying attention to the vast sums of money that had been flowing to executives and directors.

Several members of Tyco's board were furious, for example, when they learned that the company had paid a $20 million bonus--without board approval--a year earlier to a fellow director for his role in the acquisition of the CIT Group (which Tyco would later unload at a fire-sale price). The search for answers produced a schism. Belnick contacted a law firm to launch an investigation--only to be blocked by the board. (Tyco now says it wanted to keep the investigation under the board's control.) Then several months later the board hired its own investigator: Microsoft tamer David Boies and his law firm, Boies Schiller & Flexner.

Events quickly began to accelerate. Just as Boies Schiller started its probe, prosecutors served a subpoena on Tyco for records about Dennis Kozlowski's art purchases and his compensation. Belnick retained a law firm, Wilmer Cutler & Pickering--including Lewis Liman, son of Arthur Liman--to represent Tyco. Separately, Belnick contacted a private lawyer to represent Kozlowski.

Meanwhile, as Boies Schiller lawyers began asking questions, they started getting disturbing answers. The firm's mandate was quickly broadened to encompass a wide range of issues relating to executive compensation. By June 3 and 4, when Kozlowski resigned and was indicted for allegedly failing to pay taxes on art purchases, the situation at Tyco had become surreal. Tyco's New York offices were occupied by two separate teams of lawyers with seemingly similar missions, one under the control of the board and one under Belnick's direction.

Belnick, who had been intent on an investigation, now seemed to be resisting. He was alternating between cooperation and defiance, first permitting the Wilmer lawyers to work with the Boies team--and then forbidding them to do so. The board instructed Boies to take control of the investigation.

Belnick himself was now a subject of the investigation. By the end of that week, he seemed to sense his reckoning was near and began trying to protect himself. According to Tyco, he contacted a lawyer to represent him and instructed another Tyco office to fax him some 100 pages of documents relating to his compensation. Tyco says he also began deleting e-mails on his computer (a charge Belnick's lawyer disputes).

On Monday, June 10, it all came to an ignominious end: Acting CEO John Fort informed Belnick that he was fired. He was given a few minutes to gather some personal effects and permitted to take only his briefcase. Then two security guards escorted Belnick out of his office--as Lewis Liman, his mentor's son, watched.

Under ordinary circumstances, that might have been the end of the conflict. But these were anything but ordinary circumstances. No sooner was Belnick out the door than his lawyer (whom he would soon replace) issued a press release blasting what he called an "opportunistic assault" on Belnick and blaming his termination on a "legal turf war."

A week later, on June 17, Tyco sued Belnick. The company claimed that Belnick had not only received $14 million in inappropriate relocation loans but had also failed to disclose them on questionnaires used to gather information for proxy statements. (The cases brought by the district attorney and the SEC center on the veracity of Belnick's questionnaires.) Tyco has also charged Belnick with breach of fiduciary duty and with helping Kozlowski conceal $95 million in loan forgiveness.

Weingarten vehemently denies that Belnick condoned or even knew of Kozlowski's alleged misconduct. Moreover, he argues that Belnick twice took steps to institute independent investigations--hardly the sign of someone who was looking to conceal what was going on. As for Belnick's own loans, Weingarten argues that the chairman of the company told Belnick he was eligible, and Belnick was entitled to rely on that. Moreover, Belnick's loans were revealed to the company's auditors and, according to minutes of a February board meeting, had been disclosed to the board's compensation committee this past February. Weingarten says Belnick was advised that he was not obligated to reveal his loans to the SEC because the loan was offered to many employees in the regular course of business. (Indeed, at least 51 other Tyco employees received allegedly undisclosed relocation loans, which--in contrast to Belnick's loans--were forgiven by the company. Those people are not being pursued by Tyco.)

As the legal system begins its slow grind, Belnick's life is on hold. He was humiliated by the experience of being arrested. But despite the turmoil, Belnick taught his Cornell course this summer, managing even to joke to his students that they were getting a real-life education in the law. "He didn't want to go into hiding," says one friend, who says Belnick remains defiant. "He knows he did nothing wrong."

In the end, a jury may actually agree. New York law requires proof not only that Belnick failed to disclose the loans but also that he did so with "intent to defraud" Tyco and intent to commit another crime. The evidence that the company knew about his loans and that the chairman approved them may be enough to undercut such a notion.

That may not add up to absolution. Between "not guilty" and "innocent" lies a shadow. By the time this age of corporate corruption ends, that shadow is likely to darken scores of executives who succumbed, even temporarily, to temptation. Belnick may win his criminal case. Moral vindication will be harder to come by.

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