In the interview, Allen was asked about a 2002 note that Stevens sent him, thanking him for his work on "the chalet," Stevens' home in Alaska.

In the note, Stevens told Allen not to be "P.O.'d" but that Allen needed to have a conversation with one of Stevens' neighbors in Girdwood, Bob Persons, a close friend of both who helped oversee the renovation of the senator's home. It "has to be done right," Stevens wrote.

"You owe me a bill," Stevens' letter said. "Remember Torricelli, my friend. Friendship is one thing, compliance with the ethics rules entirely different."

Allen said on the stand that he was unaware at the time what Stevens meant by "Torricelli." Stevens apparently was referring to former Sen. Robert Torricelli, D-N.J., whom the Justice Department investigated in 2002 for allegedly accepting improper gifts from a donor. The investigation closed, but the Senate Ethics Committee reviewed the Justice Department files and issued a public letter of admonishment to Torricelli, who then abandoned a re-election bid and left the Senate.

Allen testified that he didn't send Stevens a bill after the note. Allen also said that he had a conversation with Persons. He testified that Persons told him, "Don't worry about getting a bill, Ted's just covering his ass."

O'Brien wrote that the interview notes indicate that Allen said he "did not recall talking to Bob Persons regarding giving a bill to the defendant."

"That statement was inconsistent with Allen's recollection at trial," O'Brien wrote, and when the Justice Department discovered the interview notes last week, the government provided a copy to defense counsel. That information could have been used when Stevens' lawyers cross-examined Allen, O'Brien noted, or in their closing statement.

The Senate's Republican leader, Sen. Mitch McConnell of Kentucky, called the Justice Department's move "a relief to Stevens and his family."

He said, however, that had the Justice Department acted last year, before the election, Republicans might not have lost the seat. That would have given Democrats — who have 58 Senate seats — one fewer seat toward a 60-vote, filibuster-proof majority.

"It was disappointing to lose the seat, no question about it," McConnell said. "No question that if this decision had been made last year he'd still be in the Senate."

Republican Sen. Lisa Murkowski, who assumed Stevens' role as the senior senator from Alaska, said she was "deeply disturbed that the government can ruin a man's career and then say, 'Never mind.'

"There is nothing that will ever compensate for the loss of his reputation or leadership to the state of Alaska," she said.

Alaska Gov. Sarah Palin echoed that theme.

"It is unfortunate that, as a result of the questionable proceedings which led to Senator Stevens’ conviction days before the election, Alaskans lost an esteemed statesman on Capitol Hill," she said in a statement. "His presence is missed.”

Stevens' replacement, Begich, said in a statement that "the decision by President Obama's Justice Department to end the prosecution of Senator Ted Stevens is reasonable."

"I always said I didn't think Senator Stevens should serve time in jail, and hopefully this decision ensures that is the case," Begich said. "It's time for Senator Stevens, his family and Alaskans to move on and put this behind us."

(Richard Mauer of the Anchorage Daily News in Anchorage and Halimah Abdullah contributed to this article.)

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