A federal judge in Denver has set aside the bank fraud conviction of a man who was described in a Senate staff report this fall as the victim of a raw deal in a bungled government investigation.

Sen. Orrin G. Hatch (R-Utah) said in a floor statement that the action reaffirmed the report's finding that the investigation in question -- one of fugitive financier Robert L. Vesco and his attempts during the Carter administration to secure the export of planes to Libya -- was "a shame and a disgrace."

According to Hatch, U.S. District Court Judge Fred Winner last Monday dismissed the charges against James Feeney, who had been an informant in the Vesco case, because of what the judge called "willful prosecutorial misconduct."

Winner's action came after a Justice Department representative acknowledged that the department had given the court "factually erroneous" information in the Denver proceedings, but did not specify what those errors were.

The Senate Judiciary Committee staff report, prepared under Hatch's aegis, pointed out last September that Feeney had been under investigation in one case while cooperating in the Vesco matter and that his right to counsel may have been compromised in the complicated process. Winner then resumed post-conviction proceedings culminating in his dismissal of the charges.