Prosecutors said newly discovered FBI files from the 1960s cast doubt on 66-year-old Peter Limone's guilt.
"The information contained in the documents undermined significantly the testimony that was given at trial by the commonwealth's chief witness," Mark Lee, Assistant District Attorney for Suffolk County, told the CBS News Early Show. "With respect to Mr. Limone, it also undermined the theory of the Commonwealth's case."
It appeared to be yet another embarrassment for the FBI's Boston office, which is under scrutiny for some agents' allegedly cozy relationships with the mob.
Last month, Justice Department investigators looking into allegations of corruption in the office gave Limone's lawyer secret FBI reports from the time around Edward "Teddy" Deegan's 1965 murder. The documents showed that an informant had given the FBI a list of suspects that did not include Limone's name.
Limone, who spend four of his 32 years behind bars on death row, was convicted in part on the testimony of mob hitman Joseph "The Animal" Barboza, one of the names on the list.
Superior Court Judge Margaret Hinkle on Thursday ordered Limone released without bail, criticizing the FBI for withholding information that could have led to Limone's acquittal.
"It is now time to move on," the judge said. "Mr. Limone's long wait is over."
About 50 friends and relatives of Limone broke into applause at the ruling.
Prosecutors would not say Friday whether they plan to retry Limone.
"Legally, we could retry Mr. Limone," Lee said. "But at this point we're guided more by ethical considerations. The question we have to ask is whether we feel ethically comfortable pursuing him."
An FBI spokeswoman declined comment Friday.
Outside the courtroom, surrounded by his wife, children and grandchildren, Limone said he was bitter about his 32-year incarceration and accused the FBI of framing him.
"I'm just happy that I have my family still and they've been with me all this time," Limone said. "Every day you look at it, and every day you know you're innocent, but you wait for this day."
Prior to his murder conviction, Limone had once been reputed to be a Mafia associate, but only had been convicted of running a dice game, said his lawyer, John Cavicchi.
Cavicchi told CBS News that he is preparing lawsuits on his client's behalf. "We're suing everybody," he said.
A motive for Deegan's slaying remains murky. Among the speculation that arose is that he was targeted in a mob hit after he and two friends allegedly robbed the home of the wrong man.
Since the new information from the FBI files was publicized, two lawyes who had underworld clients have stepped forward to say their clients - who have since died - told them innocent men had been convicted.
At the same time, the Justice Department is investigating FBI ties to reputed mob boss James "Whitey" Bulger and his lieutenant Stephen "The Rifleman" Flemmi.
FBI agent John Connolly was indicted last year on charges he took gifts from Bulger and Stephen Flemmi and tipped them off to the identities of FBI informants and witnesses who were later murdered. He is also accused of warning Bulger of an impending indictment, prompting him to flee in 1995.
Bulger is on the FBI's Ten Most Wanted List, and Flemmi is awaiting trial on murder charges.
Cavicchi said he believes the documents implicate top FBI officials in suppressing information that would have exonerated Limone.
"It doesn't name anybody, but these documents came from Washington and, I believe, J. Edgar Hoover's files," he said. "It went all the way to the top."
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