A NORTH-EAST couple walked free from court last night after a judge threw out a £6m fraud case after a series of prosecution blunders.

Susan and Michael Melton were charged with conspiracy to defraud Prudential insurance after an anonymous tip-off in September 2001 said that sub-contractors were overcharging.

The couple, of Front Street, Staindrop, County Durham, were hired by the insurance giant to troubleshoot problems arising from the mis-selling of personal pensions.

Mr and Mrs Melton, and three colleagues - Hugh Caswell, of Gwent, Colin Glossop, of Knightsbridge, West London, and David Gilbert, of Eastbourne, East Sussex - strenuously denied any wrongdoing.

Yesterday, they were found not guilty at London's Southwark Crown Court. Judge David Higgins described the situation as "a scandalous state of affairs", saying the defendants had been charged on "little or nothing of an evidential nature".

The suspects were arrested and charged between September 2001 and February 2002.

At the same time, the Prudential launched a civil case against all five, eventually settled, with the company even agreeing to provide the Meltons with a job reference.

But the criminal case continued, and yesterday Judge Higgins listed failing after failing by the prosecution. He detailed:

* a lack of communication between detectives and the Prudential resulted in huge quantities of documents being shredded;

* prosecutors failed to disclose vital documents to the defendants' legal teams;

* the trial had to be repeatedly adjourned because prosecutors didn't have all the documentation;

* other key evidence had been lost;

* prosecutors "turned their back" on evidence they felt would undermine the case.

Judge Higgins delivered a blistering attack against prosecutors, police and Crown counsel who, he claimed, had made a fair trial impossible.

He said: "Having received a complaint in September 2001, they only conducted a superficial investigation. Relevant material had been destroyed or lost. It is still being unearthed and served to the defence teams piecemeal.

"The fault of this matter I lay exclusively and wholly at the door of the prosecution.

"Frankly, the conduct of the prosecution authorities towards these defendants' solicitors and the court has often been contemptuous."

Delays in the trial had implications in the collapse of another case. A decorator accused of stealing jewellery worth £57,000 from the Meltons' home had his conviction quashed by the court of appeal last year after his legal team said the jury at Teesside Crown Court should have been told about the fraud allegations.

Following the collapse, Mrs Melton's lawyer, Ben Emerson QC, said: "She has had this case hanging over her head for this length of time, and it has been devastating.

"She now leaves court with her good character completely intact."

Mr Melton is a former landlord of the Bay Horse pub, in Hurworth, near Darlington. Mrs Melton ran a tea shop in Staindrop.

The Crown Prosecution Service declined to comment.