There are many legendary figures here in Silicon Valley. There are men like Steven Jobs and Stephen Wozniak, Bill Hewlett and . There are stories of brilliance and innovation and avarice.

But there may be no tale so poignant as that of John T. Draper, the mythical "phone phreak" who became a national figure in 1971 after being one of the first to discover that a toy whistle in the Cap'n Crunch cereal box could trick the telephone network into giving free telephone calls. Widely known as Captain Crunch, Mr. Draper has had a remarkable career since then. He was arrested and sent to prison for his telephone exploits several times and graduated from phones to computers.

He did the early design from a jail cell for EasyWriter, the word processing program that came with the first I.B.M. PC in 1981.

In the intervening decades he was for a while a millionaire who owned a house in Hawaii. But he has also lost jobs and been homeless more than once. He hacked into computer networks, using some of the same skills he honed on the telephone system. His back was permanently injured in a prison beating in Pennsylvania. He was robbed on a Texas highway where he lost a notebook computer containing the only copy of his autobiography. For years he wandered the world working where he could as a high-tech hobo — including the Goa coast in India, where in 1999 he spent six months coding Web sites for an Indian entrepreneur.

Throughout all of his travels and travails, however, Mr. Draper has maintained an almost childlike sense of optimism, and now he is trying to start over.

With a small group of partners — and perhaps a little late to the game — Mr. Draper is seeking to take part in the Internet boom. In a venture that will no doubt raise concerns for some, he and his confederates have set up an Internet security software and consulting firm, aimed at protecting the online property of corporations.

The company, which has been self- financed but is not soliciting venture capital, is called ShopIP . Mr. Draper, 57, describes himself as a "white-hat hacker" these days and sees his new venture as his way of repaying society for his misadventures three decades ago.

Mr. Draper vows that his hacking days are behind him. In the last year, he says, he has thrown himself into the study of computer security techniques with the same passion with which he once studied the intricacies of the nation's phone system.

"My eyes were opened, and this has been a real change in direction in my life," he said in an interview at a coffee house here, just a mile from the telephone booth where a government informer once cornered him for his antics with a so-called blue box — an electronic device that could generate the tones necessary for commanding the phone network. "It made me realize that I could pay back society for my deeds in the past," he added.

After starting to develop a type of network-security software program known as a fire wall in 1999, Mr. Draper met a young businessman, Daniel Baggett, now 29, who had known the older man by reputation and who now takes a sheltering stance toward him.

"Part of my mission is to protect Crunch; I respect him," Mr. Baggett said. "He played a huge role in the early days of the personal computer industry, and it's a crime he hasn't been able to reap the rewards."

And yet, the issue of white-hat vs. black-hat hackers has long been a thorny ethical debate in the computer security world, where some people have argued that there is no room for outlaws — reformed or otherwise. Others respond that the people who can best protect network computer systems are those with the most experience at testing their weaknesses.

"Whether black hats can become white hats is not a black-and-white question," said Peter Neumann, a computer security expert at SRI International, a research firm here. "In general, there are quite a few black hats who have gone straight and become very effective. But the simplistic idea that hiring overtly black-hat folks will increase your security is clearly a myth."

Mr. Draper's past was largely defined by a widely read article by Ron Rosenbaum, "Secrets of the Little Blue Box," which appeared in the October 1971 issue of Esquire.

The article described the activities of a small group of telephone "hobbyists," including Mr. Draper, who had learned how to control and misuse the nation's telephone network.

In an essay in The New York Observer this month, Mr. Rosenbaum wrote that Captain Crunch became an American antihero and a cultural icon in the intervening years.