Judge Richard Gee, 56, was said to be troubled by suicidal thoughts and the Attorney General John Morris, QC, intervened with a rarely-used procedure - nolle prosequi - to end the case.
Judge Gee, from Belgravia, central London, who is now living in the United States with his wife, denied conspiracy to obtain services by deception between 1980 and1989.
He was arrested in November 1995 shortly after he returned from his honeymoon in the Caribbean and was later committed for trial which was due to start in January this year.
But last December he was diagnosed as suffering from a "moderately severe depressive illness" and his trial was postponed until March. The jury was unable to reach a verdict after 13 days deliberation and was discharged in July, after a four-month trial. The question of whether he would face a retrial was not resolved until yesterday.
Joanna Korner QC, for the prosecution, said it was a highly unusual case and acknowledged that the judge's present state of health was partly due to the knowledge that a retrial might take place. Once that possibility was gone he could make some recovery, she said.
"The decision has been very difficult and very finely balanced," she said. But "having regard to the history and all the medical evidence now available" it had been decided not to press for a retrial and the Attorney General had been invited to enter a nolle prosequi.
"The right of the Attorney General to enter a nolle prosequi is an ancient and discretionary power which has the effect of putting a permanent stay on the prosecution," she said.
"It does not amount to a discharge or acquittal nor does it operate as a bar in law to further proceedings. But this case is clearly at an end." Miss Korner added that the course taken represented "the simplest way of recognising that fact".
Professor John Gunn, of The Maudesley Hospital, London, said it was clear that the judge's mental defences had collapsed. He was troubled by suicidal ideas and talked as if his whole life was over. "He presents the picture of a broken man. He is quite unfit to appear in a court of law in the near or foreseeable future. The stress of a retrial would endanger his life," he said.
Judge Gee, a circuit judge, was accused of taking part in the swindle which involved false details being provided to building societies and banks. The judge was a senior partner in a firm of solicitors and acted for the prime mover of the fraud who had since been convicted, said Miss Korner.
She said the events began 18 years ago, which made it an old case "by any standard", and a police investigation had failed to show that Judge Gee had obtained any personal benefit.
Stephen Batten, QC, for the defence, thanked the Attorney General for his "humane" view. He said that Mr Gee would be applying later to have the pounds 70,000 he spent on his defence returned and to have the charges quashed.Reuse content