Anchorage Daily News

WASHINGTON -- Prosecutors in the corruption case against Sen. Ted Stevens suffered a blow to their credibility Wednesday when a federal judge said their error required him to throw out some crucial evidence about the time two workers spent renovating Stevens' house.

Jurors will be told to disregard evidence they've seen concerning how much time two Veco Corp. workers, Robert "Rocky" Williams and Dave Anderson, spent remodeling Stevens' Girdwood residence in 2000 and 2001.

They'll also be told that prosecutors knew that hours Anderson worked were inappropriately calculated in the $180,000 total that Veco accounting records show the oil field services company spent on the Stevens remodel.

"It's very troubling that the government would utilize records the government knows were false," said Judge Emmet Sullivan. "And there's just no excuse for that whatsoever."

Judge Sullivan made his ruling Wednesday right after a hearing on a motion to throw out the case or declare a mistrial -- the fourth such move by Stevens' Washington D.C.-based defense team. Prosecutors had just presented their final scheduled witness, an FBI agent who walked jurors through dozens of e-mails showing Stevens' awareness of the progress and the extent of the Girdwood home remodeling.

Hours after Sullivan's ruling, prosecutors filed a motion asking him to reconsider, saying they could call another witness -- a Veco foreman -- who would clarify the hours worked on the job. They didn't name the witness, but they had originally announced Williams, a foreman, would testify for the government, but then sent him back to Alaska, saying he was suffering from health issues.

In that motion, the government also asked Sullivan to not point fingers at the government in front of the jury.

DISCREPANCIES IN EVIDENCE

Stevens, 84, is on trial for seven counts of filing false statements on the financial disclosure forms he's required to submit each year as a U.S. senator. The Alaska Republican is accused of accepting more than $250,000 in gifts and home repairs, mostly from Veco and its chief executive, Stevens' former close friend, Bill Allen.

Stevens' lawyers, led by Brendan Sullivan, filed its motion Sunday night after they reviewed more than 300 FBI interview reports and 83 grand jury transcripts the judge ordered government lawyers to turn over.

The defense team got those documents last week after Judge Sullivan ruled prosecutors had dragged their feet on turning over evidence that might be helpful to Stevens' case. That evidence included statements by Allen that he thought Stevens would have paid bills for repairs had he ever been given an invoice.

This is a criminal case with a (Senate) career on the line, and the court has responsibilities, the defense has responsibilities, the government has responsibilities," said one of Stevens' lawyers, Robert Cary. "Time and time and time again the government has not lived up to them."

The documents the defense team received last week typically aren't turned over in their entirety to defendants, but skeptical that the government had turned over everything, Judge Sullivan had prosecutors send them to Stevens' lawyers. The evidence showed that Anderson testified to a grand jury that he was in Portland, Ore., at the end of 2000, even though he submitted timesheets to Veco for work in Alaska on the Stevens place at the same time.

That chips away at the government claim that Veco spent $188,000 on Stevens' home, Stevens' lawyers argued. The $188,000 figure was one of the first numbers jurors saw, when a Veco bookkeeper testified in excruciating detail in the opening days of the trial about the total expenses the company's records showed had been spent on Stevens' home.

Prosecutors argued that they didn't think the Anderson time was an issue because there was a whole list of tradesman -- many of whom have testified during the trial about the work they did at Stevens' home -- whose time wasn't reflected in the spreadsheet created by the Veco bookkeeper.

"There was a significant amount of time that Veco put in that never got put on that spreadsheet," said Nicholas Marsh of the Justice Department's Public Integrity unit. "There's a ton of Mr. Anderson's time that never got put on that spreadsheet."

But Judge Sullivan was especially incredulous that Marsh sat in on Anderson's grand jury testimony two years ago and heard Anderson say he wasn't in Alaska, and yet still presented the worker's time sheets as accurate to jurors.

"We didn't look at the case that way," Marsh said, as he explained his theory that there were countless hours of work not reflected on the Veco spreadsheet, and that prosecutors never vouched that the summary was anything more than a Veco business record. "I'm being very truthful."

"You closed your eyes then," Judge Sullivan said. "You had to have closed your eyes to that testimony. Someone on that team knew Anderson wasn't in Alaska, he was in Portland. Someone on that team had an obligation to say 'something smells here.' "

VEHICLE SWAP OFF LIMITS

The judge's ruling Wednesday represented the third major misstep by prosecutors, although it's only the first that will be evident to jurors. Prosecutors were chided previously by the judge for sending Williams home to Alaska without telling anyone. Williams, who was so ill that prosecutors were concerned for his life, wasn't used as a prosecution witness although other witnesses have mentioned his name so frequently -- and positively -- that jurors may think they know him.

Although the judge's ruling leaves the government's case against Stevens intact, jurors will be told to disregard evidence because prosecutors failed in their obligation to disclose crucial information to the defense team.

In addition to the warning about the accounting records, they'll be given a second instruction to disregard all evidence regarding an automobile trade Stevens made with Allen. Judge Sullivan decided to strike that evidence after Stevens' lawyers complained on Tuesday that they were never shown a check that shows Allen paid $44,000 for a Land Rover. The SUV was traded to Stevens, who gave it to his daughter, for the senator's rare 1964 ½ Mustang and $5,000.

Stevens' team spent substantial time this week trying to prove that Allen didn't actually pay $44,000 for the SUV, introducing the window sticker with a price of about $42,125 and a dealer invoice for much less. But they failed to land a "gotcha" moment because prosecutors came forward with a cancelled check that showed that with dealer preparation and other charges, Allen actually paid $44,339.51. Angered, they filed their fourth motion for a mistrial.

Stevens' lawyers should have been shown the check as soon as the government knew about it, Judge Sullivan agreed. He said he was surprised prosecutors never entered it as evidence, since it could have boosted the credibility of Allen's testimony. Allen has already pleaded guilty to bribing state lawmakers in Alaska and is cooperating with the government in exchange for leniency in his own sentencing.

The chief Justice Department prosecutor in the case, Brenda Morris, told the judge that the swift-moving nature of this trial was bound to lead to some snags in turning over information to the defense. Stevens, who has held office since 1968, is up for a difficult re-election bid and asked for a speedy trial so he could have a verdict before voters make their decision about his future on Nov. 4.

But Judge Sullivan said speed was no excuse.

"It's not about the pace of litigation, it's about the fairness of the proceedings," he said. "We don't sacrifice fairness for expedience."

Contact the reporters: rmauer@adn.com and ebolstad@adn.com.

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