The decision now rests with Secretary of Defense Ash Carter, who is said to be willing to consider overruling an earlier recommendation by the Army that Petraeus not have his rank reduced. Such a demotion could cost the storied general hundreds of thousands of dollars—and deal an additional blow to his once-pristine reputation.

"The secretary is considering going in a different direction" from the Army, a defense official told The Daily Beast, because he wants to be consistent in his treatment of senior officers who engage in misconduct and to send a message that even men of Petraeus's fame and esteemed reputation are not immune to punishment.