Updated 1 p.m.

The judge in the trial of former Sen. Ted Stevens (R-Alaska) dismissed the conviction and appointed an independent prosecutor to investigate the prosecution team’s conduct in the case, with an eye to a possible criminal contempt proceeding.

“I’ve never seen anything approaching the mishandling and misconduct that I’ve seen in this case,— Judge Emmet Sullivan said during a hearing Tuesday.

The decision vacates an October jury verdict finding Stevens guilty of seven counts for failing to report $250,000 in gifts from Alaska oil company executive Bill Allen and other friends. Stevens lost his re-election bid in November.

Stevens gave a brief statement to the court, thanking the judge, his attorneys and the new government prosecutors who discovered and turned over evidence of their predecessors’ misdeeds. He said that the trial had shaken his faith in the fairness of the justice system but that now, “my faith has been restored. And I really can never thank you enough.—

Arm in arm with his wife and daughters, Stevens left the courthouse, saying only to reporters, “If I were Sen. Byrd, I’d say Hallelujah,’— a reference to Sen. Robert Byrd (D-W.Va.).

The Justice Department last week asked Sullivan to throw out the case against the former Senator, concerned about mounting evidence of misconduct by the original prosecution team.

In a motion filed April 1, the Justice Department told the court that during a recent review of the case file, the government discovered notes of an April 15, 2008, interview of Allen that contradicted what Allen said in court during the trial several months later. The discovery was made by a new team of prosecutors after the government’s original team was removed from the case in February in response to allegations of misconduct.

In court, Allen testified that he had spoken with Stevens’ friend Bob Persons about the Senator’s requests for bills for the renovation of his home and that Persons told Allen that the Senator was just “covering his a–.—

But the notes of his April interview indicate that Allen “did not recall talking to Bob Persons regarding giving a bill to the defendant. This statement by Allen during the April 15 interview was inconsistent with Allen’s recollection at trial, where he described a conversation with Persons,— the department’s motion states.

In addition, despite the prosecution’s claims that the renovation of Stevens’ Girdwood, Alaska, home cost more than $250,000, “the April 15 interview notes indicate that Allen estimated that if his workers had performed efficiently, the fair market value of the work his corporation performed on defendant’s Girdwood chalet would have been $80,000.—

During Tuesday’s hearing, Stevens’ lawyer Brendan Sullivan gave a lengthy recounting of the prosecution’s misdeeds and pointed out that key evidence was not handed over to the defense until late March, after the original prosecution team had been replaced and the jury’s verdict had been rendered. “We were close to never getting it, never having seen it,— Sullivan said. “That’s the frightening part.—

Attorney General Eric Holder said in a statement last week: “After careful review, I have concluded that certain information should have been provided to the defense for use at trial. In light of this conclusion, and in consideration of the totality of the circumstances of this particular case, I have determined that it is in the interest of justice to dismiss the indictment and not proceed with a new trial.—

Holder also promised that the department’s Office of Professional Responsibility would investigate the prosecution, but Judge Sullivan said Tuesday that that was not enough. The judge pointed out that he was first told that the Office of Professional Responsibility would look into the case in October, when the prosecution admitted that it failed to turn over some evidence to the defense. At the time, the prosecutors said they self-reported to the OPR for an investigation.

But since then, “the silence has been deafening,— the judge said Tuesday.

Judge Sullivan said he will “commence criminal contempt proceedings— against the original prosecution team, including William Welch, the chief of the Justice Department’s Public Integrity Section and five prosecutors: Brenda Morris, Edward Sullivan, Nicholas Marsh, Joseph Bottini and James Goeke. He named an independent prosecutor, Henry Schuelke, to handle the matter. Schuelke is a top trial lawyer at the Washington, D.C.-based firm Janis, Schuelke & Wechsler and former special counsel to the Senate Select Committee on Ethics from 1989 to 1991.

“I have not by any means prejudged these attorneys or their culpability,— the judge said.

During the trial, the government was forced to admit that it had improperly withheld from the defense evidence that could have been helpful to Stevens. Some documents were redacted to black out information that could have been of use to Stevens’ lawyers before the Justice Department turned them over.

The judge repeatedly chastised prosecutors and, at one point, removed key documents from the trial because he concluded that the DOJ knew the documents were incorrect when it submitted them as evidence. Stevens’ attorneys filed a half-dozen motions for dismissal throughout the case based on the prosecution’s mishandling of evidence.

After Stevens was convicted, an FBI agent came forward with allegations that other agents and members of the prosecution team had bungled the case. The agent charged that one of his colleagues carried on an inappropriate personal relationship with one of the government’s key witnesses, that evidence languished in a Justice Department hallway and that the prosecution schemed to hide evidence from the defense.

Judge Sullivan also said he would ask the U.S. Attorney’s Office for the District of Columbia to look into allegations that one of Allen’s attorneys was sitting in the gallery sending signals to Allen during his testimony.