Days before an indictment was issued against Alaska Sen. Ted Stevens in July 2008, the prosecution was in turmoil.

Longtime Department of Justice prosecutor Brenda Morris had just accepted the lead role on the trial team, a position she had turned down three times before. The personnel shift rankled other career prosecutors who had spent years in Alaska building corruption cases there. One trial attorney described the move as a “slap in the face.”

Morris, then a top supervisor in DOJ’s public integrity section in Washington, remarked later that the assignment was the beginning of a “horrible experience.”

A scathing report released last week on government missteps in the Stevens case revealed discord among prosecutors as they prepared to charge a sitting U.S. senator — for the first time in more than two decades — with public corruption crimes.

The long-awaited report is the product of the trial judge’s appointment of a special counsel, who began a rare probe of alleged prosecutorial misconduct.

Special counsel Henry “Hank” Schuelke III concluded that members of the Stevens team intentionally kept secret information that would have helped the senator’s defense. Although Schuelke said he did not find enough evidence to recommend criminal contempt charges, his 525-page report paints a picture of a case that seemingly never had a chance from the start. The report squarely blames prosecutors for skirting ethics rules and it suggests a lack of leadership and supervision played a role for the failure of one of the highest-profile white-collar cases DOJ has ever brought.

“As is understandable and sensible, the Office of the Assistant Attorney General for the Criminal Division of the Department of Justice took a keen interest in the prospective indictment and subsequent prosecution of a senior United States senator,” Schuelke wrote. “Paradoxically, however, the role of the ‘front office’ in the management of the prosecution contributed to the failures of effective supervision of the trial team by the leadership of the Public Integrity Section.”

The prosecutors who were under investigation uniformly denied intentionally withholding information from Stevens’ attorneys. They blamed, among other things, micromanagement among Criminal Division supervisors, forgetfulness, inexperience and a rushed review of the evidence.

DOJ is preparing to publish a separate but related internal investigation of the collapse of the Stevens case. Attorney General Eric Holder Jr. said on Capitol Hill this month that the report will recommend sanctions against certain Stevens trial prosecutors. Holder described Schuelke’s findings as “disturbing.”

Stevens’ attorneys, including Williams & Connolly partners Brendan Sullivan Jr. and Robert Cary, said last week there should be consequences — personally and professionally — for any prosecutor who violated ethics rules. “The Stevens case demonstrates that, although the great majority of prosecutors and law enforcement officials are honest and serve with distinction, some will do anything in order to win,” they said in a joint statement. “Senator Stevens did not deserve the treatment he received at the hands of powerful but corrupt prosecutors.”

‘CLOSE TO THE VEST’

Stevens was the biggest catch in a wider probe of corruption in Alaska dubbed “Operation Polar Pen.” Prosecu­tors alleged that Stevens made false statements on U.S. Senate financial disclosure forms, omitting hundreds of thousands of dollars in gifts and home repairs. Stevens’ defense lawyers tried to convince jurors that he believed he had paid for the work at his home. The jury found Stevens guilty in the fall of 2008.

The allegations of misconduct that plagued the trial flared up after the verdict as Stevens’ defense lawyers at Williams & Connolly pushed to get the indictment dismissed. Citing the failure of prosecutors to turn over favorable information to Stevens’ attorneys, Holder asked U.S. District Judge Emmet Sullivan to dismiss the case.

Schuelke’s report pinned the bulk of the alleged misconduct on two assistant U.S. attorneys in Alaska, Joseph Bottini and James Goeke. The two were accused of withholding information that would have gone to the credibility of the government’s main witness.

The evidence, Schuelke said, did not point to intentional concealment of information by other members of the Stevens team, which included William Welch II, the former chief of public integrity, and DOJ trial attorney Edward Sullivan. Schuelke did not take a position on the conduct of prosecutor Nicholas Marsh, who committed suicide in September 2010. The prosecutors all cooperated in the Schuelke investigation.

The Schuelke report, which had remained under seal since November, also details the role that Criminal Division’s leadership in 2008, including Assistant Attorney General Matthew Friedrich and his principal deputy, Rita Glavin, played in the Stevens prosecution.

Stevens trial attorneys said the DOJ front office played an unusually active role in managing the case, from the review and approval of court filings and opening statements to even the seating arrangement in the courtroom. Friedrich and Glavin told Schuelke they did not make decisions about the scope of exculpatory information.

Welch, according to the report, said he felt eliminated from the chain of command because Morris was reporting directly to Friedrich and Glavin. E-mails included in Schuelke’s report show that Glavin wanted Welch to review documents before she looked at them. Glavin, according to Welch, said “we have to play our cards close to the vest on this one.”

Schuelke said Morris was tied up in trial preparation and therefore “abdicated any meaningful supervisory role with respect to the matters which gave rise to this investigation.”

Bottini, then an assistant U.S. attorney in Alaska, told Schuelke there was no single coordinator on discovery issues. “[O]ne of the major problems in my view, with a lot of what happened here, is we didn’t have an intermeshing gear.” He explained later: “You’ve got wheels turning on one side, wheels turning over here on another side, and there’s no gear meshing those two wheels.”

Friedrich told Schuelke that he did not recall hearing anyone say that discovery in the Stevens case should be conducted close to the vest, the report said. Glavin told Schuelke she played no role in the discovery disputes with Williams & Connolly.

Friedrich, now a partner in the Wash­ington office of Boies, Schiller & Flexner, declined to comment about the Schuelke report, which was not provided to him or Glavin before its publication. Glavin, a Seward & Kissel partner in New York, also declined to comment.

A ‘RUDDERLESS’ REVIEW

The prosecutors’ individual responses to Schuelke’s report detailed a host of complaints with how the front office managed the investigation and the trial. Bottini’s attorney, O’Melveny & Myers partner Kenneth Wainstein, wrote that Bottini and Goeke were routinely kept in the dark about decisions being made by DOJ officials in Washington.

Kobre & Kim partner Matthew Men­chel, Goeke’s lawyer, wrote that, in the weeks leading up to the indictment, the investigation was in disarray. “Files had not been scanned,” he said. “Boxes were often disorganized and scattered about.”

The confusion, combined with the decision to place the reluctant Morris at the helm, left the team’s review of exculpatory evidence “rudderless,” according to Goeke.

Following the indictment, Wainstein wrote that the front office micromanaged the case down to “where in the courtroom members of the prosecution could sit and what member of the trial team would be responsible for particular witnesses.” He added in an interview that, “It’s clear there to me that the absence of management and the chaos under which this trial team operated was the main reason these mistakes were made.”

Welch’s attorneys, Zuckerman Spaeder partner William Taylor III and Covington & Burling partner Mark Lynch, wrote that the front office “exercised an unusual degree of supervision over the Stevens prosecution,” which included regular and direct communication with Morris. Taylor and Lynch wrote that Welch agreed with the report’s conclusion that his position in the chain of command “was at times undermined.”

Edward Sullivan’s response to the report also blamed mistakes the department may have made on the lack of formal training provided to attorneys on disclosure review. Sullivan, a junior attorney when he started working on the case, wrote in his response to Schuelke’s report that the public integrity section, along with much of the Criminal Division, “inexplicably had no formal policies or standardized procedures governing most core investigative and prosecutorial functions.”

Menchel questioned Schuelke’s decision to clear the attorneys in charge of the Stevens prosecution. “People should be asking themselves, ‘Why is it that the only people outside the beltway in this case, the Alaska AUSAs, are the only ones being held intentionally responsible for an investigation that took place in Washington?’ ” he said.

REFORMING DISCOVERY

The fallout from the Stevens report likely will not fade for months. DOJ still hasn’t released its internal ethics review of the case, which is expected to call for sanctions against certain prosecutors.

Last week, Sen. Patrick Leahy (D-Vt.), the chairman of the Senate Judiciary Committee, announced he wants to hold a hearing about the misconduct in the Stevens case before the April recess. Leahy said he’d expressed concern to DOJ that prosecutors were not meeting discovery obligations.

The same day Leahy called for a hearing, Sen. Lisa Murkowski (R-Alaska) introduced legislation to create a national standard for prosecutors on their obligations to disclose exculpatory information, to eliminate policy differences from one federal district to another.

“The varied definitions of a prosecutor’s disclosure obligations have resulted in confusing and differing disclosure practices rather than a uniform standard for the scope of disclosure,” American Bar Association President William Robinson III said in a letter to Murkowski. “The stakes in a criminal case are simply too high to sanction even one isolated occurrence of a Brady violation.”

Stevens’ lawyers, Sullivan and Cary, have repeatedly said a greater burden must be placed on prosecutors to play by the rules. Sullivan last week called the extent of the government misconduct “shocking.” Prosecutors, he said, “disregarded case law from the Supreme Court and disregarded their ethical obligations as they were hell-bent to get a sitting senator.”

Mike Scarcella can be contacted at mscarcella@alm.com and Zoe Tillman can be contacted at ztillman@alm.com. Staff writers Matthew Huisman and Todd Ruger contributed to this report.