The charge sheet was surprising both for its length and for the curious variety of the 342 items listed as stolen. Among them: a pepper grinder, a bullwhip from the first Indiana Jones film (a gift from Harrison Ford), photo negatives from Prince Harry's 2nd birthday party, a peach Valentino evening dress and a 1993 letter to Prince William from "Mummy."

Even more shocking was the identity of the man Scotland Yard detectives say committed the theft: Paul Burrell, the discreet, trusted butler who served for 10 years as Princess Diana's closest aide. On Aug. 16, Burrell—who released a statement through his lawyer declaring that he "denies absolutely" any wrongdoing—was charged with three counts of theft (one each for stealing from Prince Charles, Prince William and Diana's estate). "Everyone is really upset and saddened by it," says a friend of the Spencer family, who have been assisting the investigation via Diana's older sister Lady Sarah McCorquodale.

Most upset may be Prince Charles and Prince William, who are said to have hoped that the case would be dropped. As the legal process advances, it's possible that one or both of them may be called to testify. It is also possible that intimate aspects of Diana's life will be laid bare. After all, says Burrell's brother Graham, 35, "he was the keeper of her secrets."

Many of the princess's friends continue to support the man Diana famously called "my rock," backing up his claim that the items—worth an estimated $7 million—were likely presented to him as gifts. "Diana was very, very generous with personal things," says Palm Beach-based designer Lana Marks, a friend. Adds a source close to Burrell: "Diana used to pile this stuff in the middle of the room and say to the cleaners, chauffeurs or whomever, 'Take what you want.' "

Less clear is why Burrell would have retained personal photos and letters written by Diana to William, Charles and her brother Charles Spencer. Burrell's lawyer, Andrew Shaw, said in a statement that Diana had asked Burrell to hold on to her private correspondence for safe-keeping and that Diana's sudden death had so upset him that he has since been unable to properly sort through her things. He "may have mummified some of her possessions," Shaw conceded, "instead of dealing with them."

It was Burrell who had dealt immediately with the practicalities of Diana's 1997 death, flying to Paris after her fatal car crash and dressing her body in a Catherine Walker gown. "He had not grieved properly until all this hit the fan," says his brother.

The first hint of trouble came last November, when another of Diana's former butlers, Harold Brown, was arrested in connection with the attempted sale of a jewel-encrusted model boat that had been a wedding gift to Charles and Diana from the Emir of Bahrain. (Charged in April with four counts of theft, Brown, who now works for Princess Margaret, has pleaded not guilty.) Two months later detectives conducted a 14-hour search of the Cheshire home, 180 miles northwest of London, that Burrell shares with his wife, Maria, 47, and their sons Alexander, 16, and Nicholas, 13, confiscating some property.

Although Scotland Yard now says the cases are unrelated, they have refused to comment on whether the arrest of Brown led to that of Burrell.

Burrell will next appear in a London court for a hearing on Oct. 12. In the meantime he and his family are vacationing in Orlando. His supporters say that the accusations have devastated the butler, who has consistently turned down seven-figure offers to pen a Diana tell-all. Whatever the worth of the stolen items, notes one of Diana's friends, "the most valuable things Paul has are in his head."

Michelle Tauber
Simon Perry, Nina Biddle, Eileen Finan, and Pete Norman in London