Dominique Strauss-Kahn: Giant Step Closer to Freedom

July 2, 2011— -- Dominique Strauss-Kahn, the former head of the International Monetary Fund, has been released from house arrest, with the case against him now in shambles.

Arm in arm with his wife, Anne Sinclair, a smiling Strauss-Kahn strolled out of Manhattan State Supreme Court on Friday a free man, at least for now.

Outside the courtroom, Ken Thompson, the attorney for the 32-year-old accuser, expressed his frustration with how Manhattan District Attorney Cyrus Vance is handling the case.

"We believe the DA is laying a foundation to dismiss this case. Anyone can see that," Thompson said.

Vance, whose office is prosecuting the case, said the investigation of what happened in Strauss-Kahn's Sofitel suite between him and the hotel maid who has accused him of rape, would continue.

But the turnaround in the case came after district attorney's investigators said they uncovered significant issues with the woman's story.

Discoveries that the 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, according to law enforcement officials and other people familiar with the case.

"She could have lied on her asylum applications, she could have lied on her tax forms, that's not going to be the big problem. The big problem is when you start lying to the prosecutors about what happened in this incident -- I don't see how they can move forward," "Good Morning America" legal analyst Dan Abrams said.

Former prosecutor Robin Sax said it appears likely that the case will be dismissed.

"There is no choice unfortunately but for this case to move towards a dismissal," Sax said. "The problem is that this case stinks all around. ... It doesn't change the fact that this guy has three prior victims and now this person is also claiming the same sort of sexual abuse. It's a shame for victims everywhere.

"Victims aren't perfect. We've all cheated on an exam or stolen a piece of bubble gum or done something, perhaps even lied on a tax form. Anybody can deal with and understand that," Sax said. "The problem is when you find out through your own investigation or weeks later or even worse from the defense, it's going to be a problem you can't recover from."

Strauss-Kahn's lawyer Benjamin Brafman

"We've maintained from the beginning that Mr. Strauss Kahn is innocent of these charges," Brafman said.

Prosecutors now say the alleged victim has admitted lying about her whereabouts immediately after the alleged attack.

They also say she has fabricated her income and even how many children she has to keep her housing and increase her tax refund.

Authorities also point to a conversation she had with a jailed drug dealer about how she could benefit monetarily from going forward with the case.

"These recent disclosures re-enforce our conviction that he will be exonerated," Brafman said.

The victim's lawyer has said that his client has made some mistakes, but said that doesn't mean she wasn't raped.

He points to her physical trauma and the DNA evidence found inside the hotel room.

"The medical evidence supports the victim's account," Thompson said.

The district attorney's office also said that some type of sexual encounter did take place.

"We believe we have done nothing but to support her," Vance said. "Our office's commitment is to the truth and the facts."

Meanwhile, Lisa Friel, the chief of the Manhattan district attorney's sex crimes unit, has resigned the post she held for nearly a decade, ABC News confirmed. Her resignation Wednesday, first reported by the New York Times, comes as one of the office's most high-profile sexual assault cases continues to unravel.

While Strauss-Kahn is a giant step closer to freedom, the alleged victim's lawyer said she is not going away.

"The victim will stand before you and tell you because she said 'I will go to my grave knowing the truth, knowing what this man did to me,'" Thompson said.