"I am surprised, mystified and stunned to hear these allegations against Halderman," former CBS anchor Dan Rather, who worked with the Emmy-winning Halderman on 48 Hours, tells PEOPLE. "They are almost impossible to believe. He was always a solid character, steady, reliable, and a good, swift writer."
Halderman, 51, has pleaded not guilty to charges of grand larceny in the alleged $2 million extortion plot.
'A Popular Guy'A Dayton, Ohio, native and veteran newsman who had been on the front lines during conflicts in the former Soviet Union and during the Gulf War, he was "one of our best producers," says former CBS news executive Marcy McGinnis, who has known Halderman for 20 years. The golf-loving, book aficionado was "a popular guy," she says.
"It's like something out of a movie," McGinnis says of the unfolding allegations. "I'm in absolute shock because there's nothing about Joe that I know that would ever lead me to believe he'd be capable of being involved in anything like this."
Financial WoesBut privately, Halderman was also struggling with a divorce from his second wife, Patty Montet, with whom he has two children.
During a 2007 alimony hearing, Halderman revealed that despite his annual $214,000 income, he was trying to pay off $40,000 in credit card debt.
When asked where all his cash goes to Halderman stated, "I don't know. My life costs money."
'Something Must've Snapped'More recently, sources say Halderman has been dealing with his split from live-in girlfriend Stephanie Burkitt, 34, the woman at the center of the Letterman firestorm.
"He had that reputation [of being a ladies' man]," says McGinnis.
"I feel really sad about it because it just seems like his life is going to be ruined, and it shouldn't be," she says. "I just think that something must've snapped with him. I can't get over it."
With reporting by LINDA MARX