In dismissing indictments yesterday against 13 former employees of KPMG, the accounting firm accused of setting up illegal tax shelters, a federal judge sharply criticized prosecutors for robbing the defendants of their right to a fair trial.

“The responsibility for the dismissal of this indictment lies with the government,” Judge Lewis Kaplan of the U.S. District Court in Manhattan wrote.

Federal prosecutors overstepped their bounds when they pressured KPMG to deviate from its standard practice and not pay for its employees’ legal fees, the judge wrote. That abuse of power occurred while KPMG was negotiating with prosecutors to avoid an indictment of the company.

The prosecutors “used their life and death power over KPMG to coerce its personnel to bend to the government’s wishes, notwithstanding the fact that the Constitution barred the government from doing directly what it forced KPMG to do,” Judge Kaplan wrote.

The tax-shelter case is one of the largest ever, but the initial charges seem distant now that the case has become as much about prosecutorial misconduct as it is about corporate crime.

Judge Kaplan wrote that he had no choice but to side against the government, and the 67-page decision at times expresses regret that one of the largest tax shelter cases of all time will be dismissed on procedural issues.

Of the 17 defendants indicted, Judge Kaplan dismissed the charges against 13. The other four defendants will be tried because KPMG would not have paid for their attorneys, government tactics aside.

Judge Kaplan had explored the possibility earlier this month that the government’s mistakes could be remedied, but he ruled that that was impossible.

Even though most of the defendants have assets in the millions, the government’s actions deprived them of the more expensive lawyers KPMG would have financed if prosecutors had not overstepped their bounds, Judge Kaplan ruled.

Most of the clients had liquid assets ranging between $1 million and $3 million, the decision said.

“There is no denying the fact that this is a great deal of money to most people,” Judge Kaplan wrote. “But there is also no denying that it is not sufficient for any of them to defend this case as they would have defended it absent the government’s actions.”

The government will appeal the case, according to a statement by U.S. Attorney for the Southern District of New York Mike Garcia.

“The Government respectfully disagrees with Judge Kaplan as to whether there was any constitutional violation in this case,” Mr. Garcia said in a statement.