SAN JOSE >> A criminal charge stemming from a mortgage fraud lawsuit against San Jose City Council candidate Tam Truong was dismissed Friday, giving him a potential political boost less than two weeks from Election Day.

The single felony count of grand theft, which was initially charged Sept. 5 by the Santa Clara County District Attorney’s Office, was later transferred to the Santa Cruz County District Attorney’s Office to resolve a potential conflict. The judge presiding over Truong’s civil litigation — which is separate but provided the underpinnings of the criminal complaint — is Amber Rosen, who is married to District Attorney Jeff Rosen.

Friday afternoon, Santa Cruz County Assistant District Attorney Douglas Allen appeared via video feed in front of Santa Clara County Judge Hector Ramon and asked him to drop the charge.

“In a review of a very extensive investigation,” Allen said, “it is my determination that the case is lacking sufficient evidence to proceed, and I request this court’s dismissal.”

Truong, a San Jose police sergeant who is currently on administrative leave, appeared in court with his attorneys, Carleen Arlidge and Albie Jachimowicz, when Ramon dismissed the case. In a statement, the attorneys thanked Allen for “a thorough examination of facts and evidence in this case.”

Truong, who is running against District 8 incumbent Domingo Candelas, also issued his own statement.

“Because I am completely innocent I always knew that this would be the outcome,” Truong said. “I want to thank my friends and family who stood by me and most of all my neighbors and supporters in District 8 who never wavered in their support for our campaign for safer streets, to end street homelessness, and to make City Hall work better for all of us.”

Sean Webby, spokesperson for the Santa Clara County District Attorney’s Office, said Friday’s outcome was not a reflection of the strength of the case.

“Out of an abundance of caution, we sent this criminal case to the Santa Cruz DA’s office to make sure there was not a perception of a conflict. Apparently, they are not prepared to go forward with the prosecution,” Webby said in a statement. “Reasonable prosecutors sometimes differ in their assessments of whether they can prove a case to a jury beyond a reasonable doubt.”

Santa Clara County prosecutors have the option to re-file the criminal charge at a later time. They could also still litigate the case themselves, provided the California Attorney General’s Office reviews the case and clears any conflict.

Truong, 42, was placed on leave by the San Jose Police Department after the charge was filed in September, for what officials said was a “personnel matter.” Sources in the department confirmed the decision was related to the criminal case.

Friday, the police department declined comment on the charge dismissal, but confirmed that Truong remains on leave pending the completion of an internal investigation into the allegations against him.

After this news organization first reported Truong’s work leave and the criminal charge, his attorney sent out a statement on his behalf asserting the charge was “based on a misunderstanding of all the facts in this case” and that it was being settled through the “appropriate venue” of civil court.

In a September 2022 lawsuit, Orange Coast Title Company of Northern California and Real Advantage Title Insurance Company accused Truong of fraud for using documents from a past bankruptcy to convince an escrow agent that he owned a San Jose property outright when he still owed hundreds of thousands of dollars to his mortgage lender.

Truong then sold his home and pocketed nearly $540,000 that should have gone to the lender and later used the proceeds to purchase another property, the civil suit alleges. Truong would not have been able to sell his home unless he had removed all the liens on the property.

The criminal investigation largely repeated the claims made in the lawsuit.

Truong’s business practices have come under scrutiny before. In 2015, the police department suspended Truong’s outside work permit to investigate whether his management and ownership of a private security firm presented a conflict of interest that put him in competition with his employer.

He contended he had done nothing improper. In a separate instance, the firm was sued over alleged wage theft.

Staff writer Devan Patel contributed to this report.