Mike Perlstein / Eyewitness News
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NEW ORLEANS - The long and costly federal investigation against target Fred Heebe and River Birch landfill has been abruptly abandoned by the U.S. Attorney's office, according to court documents and attorneys in the case.

The sudden and shocking abandonment of the case came in the form of motion to dismiss indictments against River Birch-related figures Dominick Fazzio, the company's CFO, and businessman Mark Titus, a Fazzio business partner who previously pleaded guilty in an unrelated fraud case but has been trying to rescind his plea.

The motion from the U.S. Justice Department doesn't give the details about the sudden reversal, but it appears to stem from the online commenting scandal that led to four high-profile departures from the top ranks of the U.S. Attorney's office, including longtime U.S. Attorney Jim Letten.

Letten declined to comment when reached by cell phone.

The motion, filed late Friday morning, is signed by Jack Smith, chief of the Justice Department's Public Integrity Section and its criminal division, the office investigating the online commenting scandal.

The one-sentence court filing refers only to 'evidentiary concerns' as the reason for the about-face.

A DOJ spokesman contacted by WWL-TV declined to elaborate, saying the decision to dismiss the charges against Fazzio and Tutus was 'based solely on the facts and evidence as they exist at this time.'

Heebe, through his lawyers, released a statement Friday saying that he was informed by Smith's office that the Justice Department would not be pursuing any charges against him. The statement thanked Smith and his staff for their handling of the case after they took over for Letten's team.

While he was never indicted, Heebe and his team of attorneys went on the offensive in the sprawling investigation against him and ultimately exposed through defamation lawsuits filed in civil court the frequent anonymous online comments by veteran federal prosecutor Sal Perricone and First Assistant Jan Mann, both of whom were forced to resign. The comments, which appeared after news stories on, included caustic and disparaging comments about judges, attorneys and federal targets, including Heebe.

As a result of the scandal, Mann's husband, longtime prosecutor Jim Mann, also left the office, but the biggest blow to the office was Letten's resignation amid the internal investigation.

The local U.S. attorney's office has been recused from matter and is prohibited from making any statements.

Fazzio's attorney, Arthur 'Buddy' Lemann III, said his client was thrilled and relieved that he will not be brought to trial.

'It's like knocking out your opponent before he even gets in the ring,' Lemann said. 'But this case, as Judge (Ginger) Berrigan said, has had a very troubling history. And Public Integrity is to be commended, in my opinion, for finally recognizing that this was a miscarriage of justice, that they've got to abort and end this ill-conceived prosecution.

Lemann said the sudden dismissal of the case forced the cancellation of a court-ordered inspection Friday afternoon by his investigators of a potentially key piece of evidence seized by the FBI: a small tape recorder disguised as a pen that Titus said he used to tape a conversation he had with FBI agents.

Titus testified in a previous court hearing that he recorded the agents trying to strong-arm him into convincing Fazzio to join the case as a government witness against Heebe, promising leniency in the form of not seizing his property. The agents eventually discovered and confiscated the spy-like tape recorder as evidence.

On the witness stand, an FBI agent denied making promises to Titus, but the government refused to let Fazzio's defense team inspect and listen to the tape recording, Lemann said. Lemann successfully appealed the government's decision and was prepared to listen to the recording Friday when suddenly it became a moot point.

Heebe has been targeted by federal authorities for more than four years in connection with a $160 million contract he was awarded by Jefferson Parish. Allegations swirled about alleged payoffs made by Heebe to land the contract, payments characterized by Heebe's attorneys as legal costs of lobbying and marketing.

In fact, one recipient of money from River Birch previously pleaded guilty and was set to testify against Heebe. Former state Wildlife and Fisheries commissioner Henry Mouton admitted taking bribes and has been waiting in the wings as a potential government witness.

There has been no change in the status of Mouton's case. He is scheduled to be sentenced June 19.

Separately, the U.S. government filed a notice in Heebe's civil defamation case that indicates the government mishandled evidence in the case.

The notice stated that the government 'intends to return all property seized from the offices of the River Birch Landfill' during a 2010 raid 'without retaining any copies and does not intend to use the seized property for any purpose.' The government also admitted that it failed to search completely for privileged material from the computers they seized in the raid.

The filing says the FBI used a 'block' function to scrub out all privileged information, but it didn't work properly, meaning it took information it was not supposed to have. Despite this, the government filed a notice on Jan. 5, 2011, stating that it had searched for all privileged material and found none. Now, the government is correcting that statement.

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