A former real estate developer believes that when a 3rd District judge on Tuesday reversed his felony conviction for theft it was the first step in the road to complete exoneration from the 48 felonies he was charged with two years ago.

"I do not believe C. Dean Larsen committed any criminal offense," said his attorney, Larry Keller. "I am absolutely convinced the day will come when he will be totally vindicated."Former 3rd District Judge Leonard Russon announced to a stunned courtroom Tuesday that he was overturning the guilty verdict imposed on Larsen by a jury in December. Russon told the court he believed Larsen's act constituted a civil breach of contract but not a crime and acquitted Larsen.

"We were extremely pleased with the judge's decision," Keller said. And he was surprised. Keller had argued during the trial that the facts proven by the state during trial constituted a civil offense but not a crime. He made a motion twice in trial asking the judge to rule that the evidence presented did not constitute a crime and to acquit Larsen.

But Russon refused both times.

Since the trial, Russon has been appointed to the bench of the Utah Court of Appeals. He returned to the 3rd District bench for one day Tuesday ostensibly to sentence Larsen but acquitted him instead.

Assistant Utah Attorney General Rob Parrish was dismayed by Russon's reversal. "It's discouraging and disheartening," he said, noting that the state has spent years investigating the case and preparing for Larsen's two trials.

The state alleged that Larsen used more than $800,000 from the 1986 sale of a Las Vegas mobile home park to pay off his real estate company's debts and cover his payroll in the months before his company collapsed into bankruptcy.

The money should have gone to the owners of the mobile home park.

The attorney general will appeal Russon's decision, Parrish said. If the Utah Court of Appeals upholds Russon's decision, Tuesday's acquittal stands. If the appeals court reverses it, the jury's guilty verdict stands and Larsen will be sentenced for the felony theft.

Russon also stayed Larsen's prison sentence for a previous conviction until the appeals court considers Larsen's appeal. A jury convicted Larsen on 18 counts of felony fraud in June. Russon sentenced Larsen to nine years in the Utah State Prison for the crimes, fined him $90,000 and ordered him to pay $700,000 in restitution.

Larsen's prison sentence was scheduled to begin in December. It was originally delayed until the outcome of his December theft trial.

Larsen, 56, began building a real estate empire called Granada 17 years ago. The former millionaire created nearly 50 limited partnerships under the Granada umbrella, seeking investors to pay for the development of properties ranging from out-of-state mobile home parks to several downtown office buildings.

Granada declared bankruptcy in 1987. Larsen's personal bankruptcy followed shortly thereafter. In December, 1988, the Utah attorney general charged Larsen with 48 felony counts of fraud, theft, sale of unregistered securities and misconduct by fiduciary. Four of the charges were dropped in a three-week preliminary hearing. After Larsen's conviction on 18 fraud charges and one theft charge, the state dropped the remaining 23 charges.