Albany

Federal prosecutors have dropped their arson case against Robert A. Butler, the man who was facing a possible death sentence if convicted of setting a Schenectady fire that killed a man and his three children last year.

Butler, of Saratoga Springs, will be freed. The stunning turn of events came after a new suspect had emerged in the case, which was first reported last month by the Times Union.

"The gravity of the crime and the potential punishments, the unusual and complex facts, including information regarding the involvement of others, and the circumstances regarding eyewitnesses necessitate further investigation," First Assistant U.S. Attorney Grant Jaquith wrote in a filing Friday in U.S. District Court.

Butler was first charged by Schenectady County prosecutors before U.S. Attorney Richard Hartunian's Northern District took over the case.

Chief Judge Gary Sharpe dismissed the case without prejudice, which means prosecutors could still press charges against Butler if they wish.

Butler's attorney, Assistant Federal Public Defender Timothy Austin, said it was a clear case of the wrong man being charged.

"Robert Butler is innocent," he said. "There is indisputable video evidence that someone else committed the crime. It's entirely appropriate that the government would dismiss the complaint against Mr. Butler."

Prosecutors had until Feb. 10 to secure a federal grand jury indictment against Butler. The office twice received extensions in a joint agreement with Butler's attorney.

"We are completely committed to continuing this investigation until justice is done," Hartunian said in a statement on Friday. "The victims of this horrific crime deserve and will continue to get our best efforts to secure justice."

Butler was charged last spring with deliberately setting the May 2 blaze at 438 Hulett St. in Hamilton Hill that took the lives of David Terry, 32, and his children, Layah Terry, 3; Michael Terry, 2; and Donavan Duell, 11 months. Terry's 5-year-old daughter, Sa'fyre, suffered burns to 75 percent of her body.

Attention is now focused on the boyfriend of a woman that David Terry may have been involved with, according to those with knowledge of the case.

That man's vehicle was caught on surveillance video arriving and leaving the area around the home.

The same man also allegedly sent more than 100 text messages to Terry's cellphone — including at least one in which he threatened to kill Terry, according to those with knowledge of the investigation.

Butler at one point lived in the home but was kicked out by Terry, authorities said, because Terry believed Butler had hit Jennica Duell, the mother of the children and Butler's former girlfriend.

An acquaintance of Butler had sent text messages saying Butler wanted to kill Terry and two other men in the home because he thought Terry was "(messing) with his and Jennica's life."

The complaint alleged that on the night of the fire, Butler traveled from Saratoga Springs to Schenectady. On the way, the complaint said, Butler "said something about killing David Terry, or words to that effect."

The complaint also said a friend of Butler sent text messages just days before the blaze stating that Butler was about to "go to Schenectady to split some wigs" and that "Rob wants to kill."

Two alleged eyewitnesses identified Butler as the arsonist. The criminal complaint said Butler told Schenectady police: "I didn't want to do it."

In July, Jennica Duell told the Times Union she was sleeping in Saratoga Springs — not at the arson scene, as she testified under oath to a grand jury.

Duell said she initially told Schenectady police that she was in Saratoga Springs coming down from an LSD trip, but changed her story when police did not believe her.

rgavin@timesunion.com • 518-434-2403 • @RobertGavinTU