Judge: Sen. Stevens corruption trial to proceed

WASHINGTON (Reuters) - A federal judge on Thursday rejected a request by Republican U.S. Sen. Ted Stevens of Alaska to dismiss the charges or declare a mistrial because prosecutors withheld helpful evidence from the defense.

Although U.S. District Judge Emmet Sullivan allowed the trial to go forward, he said he had lost confidence in the ability of Justice Department prosecutors to fulfill their legal obligation to turn over helpful evidence to the defense.

The judge said he thought there had been a violation of that obligation. "I am very disturbed that this happened," Sullivan said.

Prosecutors admitted a mistake had been made, but said the oversight was not serious enough to warrant dismissing the case or ordering a new trial.

The judge's decision to allow the trial to go forward was a setback for Stevens, 84, one of the Senate's most powerful Republicans who is seeking reelection in November.

He is on trial, accused of filing false financial disclosure forms with the Senate by failing to include more than $250,000 in gifts he received.

Stevens, who has been in the Senate for 40 years and is the longest-serving Republican senator in U.S. history, faces a close race in what has long been a safe Republican seat. His Democratic opponent is Anchorage Mayor Mark Begich.

ADJOURNMENT TO MONDAY

The judge said he would adjourn the trial until Monday to give defense lawyers time to review new information that he ordered the prosecutors to turn over.

The information cited by the defense involved an interview by an FBI agent with Bill Allen, the prosecution's star witness. Allen said he believed Stevens and his wife would have paid for the renovations to their home in Alaska if Allen had sent them a bill.

Prosecutors had notified the defense about the information only late on Wednesday, after Allen had completed his second day of testimony about the renovations performed by his oil services company, VECO Corp.

The disclosure of the mistake was an embarrassment for the Justice Department in a high-profile public corruption case.

Defense lawyers filed an emergency motion to dismiss the indictment or for a mistrial. "Enough is enough," they said. "It is impossible at this point to have a fair trial."

The new evidence involved an interview that had been turned over to the defense, but the key part of what Allen said -- that the couple would pay if they had been sent a bill -- had been blacked out.

It marked the second time this week the judge has scolded prosecutors. He previously rebuked them for sending another witness, the foreman of the renovation project, back to Alaska without notifying Stevens' lawyers.

Defense lawyer Robert Cary said it was part of a pattern of conduct by the prosecutors and warranted dismissing the case or a mistrial. "Our position is it's broken and can't be fixed, your honor."

Prosecutor Brenda Morris said the incident was reported to the Justice Department unit that investigates possible lawyer misconduct. "We had to step up and take our medicine and that's what we have done," she said.

(Editing by Eric Walsh)