Is Dennis Kozlowski about to be freed on parole?

Dennis Kozlowski in 2005.

FORTUNE — Don’t expect Dennis Kozlowski to be back running some big company or living the high life that got him into trouble in the first place. But the former Tyco (TYC) CEO — still the poster boy for a forgotten epoch of Wall Street greed — may be a lot closer to partial freedom than press reports suggested on Thursday.

Convicted in 2005 of systematically looting his company of millions of dollars, Kozlowski was sentenced to 8 1/3 to 25 years in New York State prison — a sentence remarkable as much for its indeterminacy as its length. He has so far lost all his appeals to overturn his conviction. But because Kozlowski was a model inmate, he came up for parole last year, even before he had served the minimum of his sentence. The parole board in April turned him down, citing in a brief ruling “concern for the public safety and welfare,” and underscoring “your theft of over $100 million from Tyco … in glaring violation of the trust placed in you as CEO by the board of directors and corporate shareholders.” Early release, the parole board stated, “would tend to deprecate the seriousness” of Kozlowski’s crimes and “undermine respect for the law.”

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Kozlowski sued, challenging the board’s ruling as “inadequate on its face.” A state court agreed this week. In a four-page decision released Thursday morning, Justice Carol Huff ordered the parole board to conduct a new hearing. She dismissively called the board’s findings “almost entirely conclusory,” which would require her “speculation to attempt to understand how it was decided that the granting of parole would deprecate the seriousness of [Kozlowski’s] offense and undermine respect for law, or affect public safety and welfare.” (Kozlowski v. N.Y. State Board of Parole, No. 104097/12)

In theory, the board could come up with a detailed, wholly new rationale to justify Kozlowski’s continued incarceration. And parole boards in New York are given vast statutory discretion that’s largely unreviewable by courts. But especially in this highly visible case, the parole board may be boxed in. Judge Hoff ruled that parole cannot be denied solely on the basis of a crime’s “seriousness,” lest a board’s decision become tantamount to “an unauthorized resentencing of the defendant.” That means the board likely now has to explain why Kozlowski’s partial freedom would somehow endanger public safety or undermine respect for law. Given Kozlowski’s exemplary record as inmate No. 05A4820 at the medium-security Mid-State Correctional Facility in upstate New York, it will be a difficult argument to make.

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It will be especially tough since Kozlowski, now 66, has already been out of the joint for a year, uneventfully — on work-release. He’s actually back in Manhattan on Central Park — at the minimum-security Lincoln Correctional Facility on West 110th Street. It’s not quite the same as his old 13-room spread on Fifth Avenue (yes, the apartment with the notorious corporate-funded $6,000 gilded shower curtain). But it’s also a far cry from Mid-State. Every day, unattended, Kozlowski goes to work daily as a clerk in the office of a software company. On Saturday nights, he doesn’t have to be at Lincoln at all. Parole of course would free Kozlowski from Lincoln entirely.  The issue now is how hard the State of New York will try to make the case that he shouldn’t be.

Read excerpts of Fortune’s extended in-prison interview with Kozlowski in 2009. 

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