updated 8/28/2009 7:05:04 PM ET 2009-08-28T23:05:04

A judge on Friday dismissed a major international drug case and ordered that the alleged dealer not be charged again after the prosecution fell apart.

Chinese-Mexican businessman Zhenli Ye Gon has been jailed for two years on charges of importing methamphetamine from Mexico into the United States. Authorities said they seized more than $205 million, the largest drug-related cash seizure in history, from his Mexico City mansion when he was arrested.

The Justice Department asked U.S. District Judge Emmet Sullivan to dismiss the case because one witness has recanted and another has refused to testify. At a hearing on Tuesday, prosecutors had asked that he leave open their option to charge him again, but at that time Sullivan suggested that they reconsider that request.

Sullivan had criticized prosecutors for taking months to reveal the witness problems while Ye Gon was kept behind bars, even though they were required to do so by Justice Department policy and the Constitution.

Representatives from both sides in the case said prosecutor Paul O'Brien returned before Sullivan on Tuesday and said the Justice Department would not oppose an order preventing new charges against Ye Gon, especially since he faces organized crime, drug trafficking and weapons charges in Mexico. But O'Brien was adamant that there was no prosecutorial misconduct in the case that would justify the judge making such an order.

In a hearing two months ago, the judge questioned whether the Justice Department has a pattern of mishandling evidence after Ye Gon became the second high-profile prosecution to fall apart in his courtroom.

The other was the case against former Republican Sen. Ted Stevens of Alaska. Sullivan dismissed Stevens' conviction on corruption charges after prosecutors admitted they did not turn over important witness statements that could have aided the defense.

'Incredibly grateful'
Mexican officials say Ye Gon was involved in one of the Western hemisphere's largest networks for trafficking pseudoephedrine, the main ingredient in methamphetamines. Ye Gon said the chemicals imported by his company, Unimed Pharm Chem de Mexico SA, were legitimate and intended for use in prescription drugs.

Ye Gon remains incarcerated pending a Sept. 17 hearing on whether he should be extradited to Mexico. His attorney, Manuel Retureta, said he is fighting to stay in the United States because he doesn't believe he can receive a fair trial in Mexico.

Ye Gon was in the United States legally in July 2007, when he was arrested in Wheaton, Maryland while dining in a restaurant. Retureta said his visa expired while he was imprisoned and so he's being held under immigration rules.

Retureta said Ye Gon is "incredibly grateful and emotional" about the case being dismissed.

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