Holder's Bold Stroke

This story was written by Josh Gerstein.

"It's very significant," said Stan Brand, a former counsel to the House of Representatives. "It's obviously a very different and affirmative assertion of control over the Department of Justice and his signal that the department is going to demand higher standards."

Yet there is evidence in the court filings from the DOJ on Wednesday that Holder might well have felt he had little choice but to drop the case against the former Alaska senator. Though some lawyers believe the DOJ could have won a retrial, the government's first effort was so riddled with problems that prosecutors were repeatedly rebuked by Judge Emmet Sullivan for withholding evidence and disobeying his orders.

The Justice filings even say a new piece of possible prosecutorial misconduct surfaced recently: notes from an interview with a key prosecution witness that differed from the testimony that same witness gave in open court.

And Holder himself cut his teeth on a public integrity case, as the lead prosecutor in the case that felled House Ways and Means Committee Chairman Dan Rostenkowski. The legendary congressman ultimately pleaded guilty and was sentenced to 17 months in prison. One former colleague believes Holder must have been shocked at some of what happened in the Stevens case.

"He was very proud of the Rostenkowski case and how it was handled," said ex-prosecutor Wendy Wysong. "I'm sure he was horrified at the allegations of how the Stevens case was investigated and prosecuted, whether or not they were true."

Still, Holder's message to the department was firm and unmistakable: He would not tolerate sloppy prosecutions and wouldn't hesitate to undo work done by his predecessor's Justice Department, even in the most closely watched cases.

His ire Wednesday seemed most focused on the Public Integrity Section, which oversaw the senator's prosecution and is headed by career prosecutors, making it fairly insulated from political pressures. Of course, the department won no praise in Republican circles for taking on a veteran Republican senator, right at the moment he was seeking reelection.

Stevens' trial also took place while the DOJ was headed by Michael Mukasey, a former federal judge with a strait-laced reputation.

One observer said that, regardless of whether politics were to blame, the revelations in the Stevens case signal that DOJ's public integrity operation was being poorly run.

 "Based on what we know, that office needs to be cleaned out - root and branch," said Gerry Hebert of the Campaign Legal Center. He said the investigations of former Reps. Tom DeLay, John Doolittle and William Jefferson all seem to have bogged down, perhaps because of fallout from the Stevens imbroglio.

"It really concerns me ... that they haven't been handled properly. Someone in the new administration needs to oversee those investigations and make sure they're being handled fairly and evenhandedly," Hebert said.

Wysong said the conduct of senior Justice Department officials during the Bush administration may have permeated the public integrity section, even if there was no political interference. "There is a tone set at the top. If you don't have people at the very top absolutely committed to the standards of justice, it's easy to rationalize some of your decisions," she said.

Hebert expressed some concerns about Holder's decision to drop the case, rather than call for a new trial, but said he "couldn't quarrel" with the call. "This is nota vindication of Ted Stevens. This is more an indictment of the prosecution and their misconduct," he said.

In an unusual statement to reporters Wednesday, Stevens' attorney Brendan Sullivan was unmerciful toward the prosecutors in the case, accusing them of acting corruptly even as they purported to root out corruption by his client. However, the defense attorney said he was "very grateful" to Holder for his move to abandon the prosecution.

"That decision was justified by the extraordinary evidence of government corruption in this case," Sullivan said. "Not only did the government fail to provide evidence to the defense that the law requires them to provide, but they created false testimony that they gave us, and they actually presented false testimony in the courtroom."

Holder may have been particularly unforgiving to the public integrity team because that is where he got his start at the Justice Department in 1976, helping on the prosecution of John Jenrette in the Abscam scandal. "Holder worked there. That's where he comes from, and he has a special attachment," Brand said.

Others pointed to the Rostenkowski case as important preparation for Holder. It "gave him the steel to make the decision," said Roscoe Howard Jr., one of Holder's successors. "He understands that probably the worst thing in the world these people can do is handle something like this in a high-profile case and handle it wrong."

Howard said the move was necessary not simply to restore confidence inside the Justice Department but to convince those who deal with the department that prosecutors there can be trusted.

"There are times to protect your people, but there are also times to protect the Justice Department," he said. "It's hard for potential defendants and defense attorneys to deal with people capable of doing something like this. The trust factor is huge in this business. ... In my opinion, it's the right thing to do."

Read more CBS News coverage about Holder

John Bresnahan contributed to this story.

By Josh Gerstein