Alaska Attorney General Dan Sullivan said Thursday that state prosecutors are examining sex abuse allegations against former Veco Corp. chief Bill Allen, revitalizing a case that the U.S. Justice Department recently decided not to pursue.

Allen, 73, was the key witness in a string of Alaska political corruption cases. The decision by top Justice Department officials not to prosecute Allen on sex charges didn't sit well with Anchorage police and one of his alleged victims, a young woman who said she first had sex with Allen when she was a 15-year-old prostitute in Spenard.

No one at the Department of Law, including the Anchorage district attorney, knew about the woman's allegations before they were detailed in an Aug. 21 Daily News story, Sullivan said.

"I can tell you that we were just as concerned about this case as anyone else who read that article," Sullivan said.

Anchorage police had been working with a trial attorney in the federal Child Exploitation and Obscenity Section in Washington, D.C., for two years. Investigators on the teen's case said the prosecutor and his supervisor supported taking it to a federal grand jury, but they were overruled. Police were given no explanation.

"Everyone expected the case to go federal. And that was it," said police Lt. Dave Parker, explaining why police didn't go to state prosecutors initially.

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