DETROIT (AP) – An appeals court has dismissed charges against two men convicted in a $7 million fraud, an extraordinary defeat for federal prosecutors in western Michigan who waited too long to bring them to court.

Michael Heshelman has been serving a 17-year prison sentence after a jury convicted him in 2009. A co-defendant, Bryce Sherwood, pleaded guilty and is serving a five-year prison sentence.

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They now are likely to go free after the 6th U.S. Circuit Court of Appeals said a delay of more than three years between the indictment and their arrest violated their constitutional right to a speedy trial.

The government accused Heshelman, formerly of Battle Creek, of living lavishly overseas with money collected from unwitting investors, including $2.5 million from the family of a Barry County pastor, Alan Moody.

“That’s interesting. It was such a slam dunk, overwhelming thing. I’ll give the FBI a call,” Moody, youth pastor at First Baptist Church in Middleville, said when informed by The Associated Press.

Heshelman was indicted in 2006, but the charges were sealed and he didn’t know about them. He wasn’t arrested until 2009.

He mostly was living in Switzerland during that time. Prosecutors didn’t immediately pursue Heshelman because they feared the Swiss government might resist an extradition request on money laundering, the most serious charge.

The government figured it would wait until he returned to the United States, although he hadn’t been in the U.S. since 2004.

“The government in this case provides no evidence to support its claim that extraditing Heshelman from Switzerland would have been difficult,” the appeals court said in a 3-0 decision.

“On the contrary, the record demonstrates that the Swiss government willingly provided assistance when able and that once the United States finally decided to request extradition the Swiss government acted promptly and granted the government’s request in two weeks,” the court said.

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The court said the indictment cannot be refiled.

Assistant U.S. Attorney Dan Mekaru in Grand Rapids said the government is reviewing options, including possibly asking the entire appeals court to look at the case. Messages seeking comment were not immediately returned Tuesday by lawyers for Heshelman and Sherwood.

“It’s over. It’s very embarrassing,” said Keith Corbett, a former federal prosecutor in Detroit who read the decision.

Sherwood pleaded guilty to conspiracy instead of going to trial. But the appeals court said his rights were violated, too, by a 39-month delay. Although Sherwood was in the U.S., prosecutors didn’t immediately arrest him because they wanted to put both men on trial at the same time.

Sherwood was accused of lining up investors for Heshelman by offering interest at eight percent to 15 percent, between 1999 and 2006.

“It didn’t trip flags as ridiculous or outlandish,” Moody said. “It was better than what the market was doing but not by much.”

He said he met Sherwood at his church, 30 miles southeast of Grand Rapids. Moody said he and wife Amy lost $2.5 million, money that was supposed to be invested for charitable projects.

The couple had created a foundation with the money, which came from a settlement in a van crash that killed six members of Amy Moody’s family in Wisconsin in 1994.

“When you get something like that, there’s a responsibility to use it wisely,” Alan Moody said. “We thought we were doing something reasonable.”

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