La Paz, Bolivia --

A Bolivian judge on Tuesday released a New York businessman and granted him house arrest after he was jailed for 18 months without charge despite strong evidence that he was fleeced and extorted by corrupt prosecutors.

Jacob Ostreicher hugged his wife and his lawyers after hearing the judge's ruling. The 54-year-old American will now be under house arrest while the authorities finish investigating his money-laundering case.

Ostreicher was never charged with any crime, and the people who led his prosecution, including the No. 1 legal adviser in the Interior Ministry, are now themselves in jail, accused of belonging to a shakedown ring that authorities say preyed on people deemed to have deep pockets.

Ten officials have been arrested, including two prosecutors and alleged ringleader Fernando Rivera, who had been managing Bolivia's most important prosecutions in the Interior Ministry.

Ostreicher arrived at the hearing in an ambulance from a medical clinic where he has been treated for more than a month. The decision to grant him house arrest came days after American actor Sean Penn made a direct public appeal to Bolivian President Evo Morales to order him freed.

Ostreicher has been weakened from a liquids-only hunger strike and was moved to the private clinic on Oct. 31 after Penn intervened on his behalf. After his release, he returned to the clinic.


The Orthodox Jew, who has a flooring business in Brooklyn, complained from the start that he was being fleeced.