Dominique Strauss-Kahn Case Unraveling? Prosecutors Find Significant Problems With Accuser's Account

VIDEO: Former IMF chief released after new details discredit the sexual assault case.
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Manhattan District Attorney's investigators have uncovered significant issues with the account of the maid who claimed she was assaulted in a New York City hotel room by the former head of the International Monetary Fund, Dominique Strauss-Kahn, ABC News has learned.

Discoveries that the Sofitel hotel maid considered financial gain, had questionable relationships with at least one alleged drug dealer and other issues in her past prompted prosecutors to present their findings to the defense and represent a backdrop to a bail modification hearing Friday, according to law enforcement officials and other people familiar with the case.

While prosecutors were initially extremely confident in their case after Strauss-Kahn's May 14 arrest, as soon as they realized it was unraveling, they did what was proper and contacted the defense. Senior prosecutors met with lawyers for Strauss-Kahn and provided details about their findings, ABC confirmed.

"It is really the job of the district attorney to do justice," one source said. "And what may seem like justice at one stage of the case may not be justice at a later stage. That's what happened here."

It is likely the strict terms of Strauss-Kahn's bail will be relaxed by Judge Michael Obus at Friday's Manhattan State Supreme Court hearing, law enforcement sources said.

The unraveling of the case was first reported Thursday by the New York Times, which noted that the prosecution and defense are engaged in conversations that could result in dismissal of serious charges against Strauss-Kahn. ABC News subsequently confirmed that information.

The holes in the credibility of the housekeeper led prosecutors to doubt much of what the accuser has told them about the circumstances of the case or about herself, ABC News has confirmed.

The Times noted that among the discoveries, "one of the officials said, are issues involving the asylum application of the 32-year-old housekeeper, who is Guinean, and possible links to criminal activities, including drug dealing and money laundering."

Prosecutors from the office of District Attorney Cyrus R. Vance Jr., plan to tell the court that there are problems with their case, ABC News has learned.

More details are expected to be presented to the judge, two persons involved in the case acknowledged.

According to The Times "the woman had a phone conversation with an incarcerated man within a day of her encounter with Mr. Strauss Kahn in which she discussed the possible benefits of pursuing the charges against him. The conversation was recorded."

That man, as the Times reported, had been arrested on charges of possessing 400 pounds of marijuana. He was among a number of individuals who made multiple cash deposits, into the woman's bank account.

According to The Times, an official told the newspaper that "she told investigators that part of her application for asylum included a previous rape, but there was no such account in the application. She also told them that she had been subjected to genital mutilation, but her account to the investigators differed from what was contained in the asylum application."

In addition, Benjamin Brafman and William Taylor, lawyers for Strauss-Kahn, wrote to the Manhattan District Attorney's Office in a May 25 letter that they had "substantial information that in our view would seriously undermine the quality of this prosecution and also gravely undermine the credibility of the complainant in this case."

Evidence that the defense is expected to present in court is consistent with the May 25 letter, sources said. It is expected to disclose financial records and other material that the defense, according to sources, says will badly damage the case against Strauss-Kahn.

Strauss-Kahn, a leading candidate for the French presidency before being accused of sexually assaulting the woman, resigned his powerful position as head of the International Monetary Fund in the wake of the allegations against him.

ABC News' Lauren Pearle contributed to this report.

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