(CNN) -- A Florida court has vacated the murder conviction of former FBI agent John Connolly, the informant handler of convicted Boston mob boss James "Whitey" Bulger, according to court documents.
Citing a statute of limitations issue, the Florida Court of Appeals reversed the 2008 second-degree murder conviction for Connolly's alleged role in the 1982 death of a Florida businessman.
In 2005 Connolly was charged with first-degree premeditated murder and conspiracy to commit first-degree murder. During his 2008 trial, prosecutors presented evidence that in 1982, Connolly, then an FBI agent, schemed with Bulger and the Winter Hill gang to kill businessman John Callahan. It was revealed in court that Connolly, Bulger and associates met over several weeks before the slaying, but it was "undisputed" that hit man James Martorano, and not Connolly, fired the murder weapon.
The jury convicted Connolly of second-degree murder with a firearm, a lesser included offense of first-degree murder.
The Florida Court of Appeals on Wednesday determined that prosecutors had incorrectly requested that the jury be allowed to convict on second-degree murder with a weapon, instead of first-degree murder, because Connolly's gun was not used in the crime. This allowance, the court said, subsequently reclassified and elevated Connolly's conviction to a crime with a potential life sentence without a statute of limitation.
Connolly was sentenced to 40 years in prison in 2009.
In the 2-1 decision, the court reasoned, "without the fundamentally erroneous reclassification" of this murder charge to second-degree murder with a weapon, Connolly's conviction would have been barred by the applicable four-year statute of limitations.
The court vacated the conviction and remanded the case to the trial court, ordering that Connolly be discharged, adding that the "discharge shall be stayed until any and all post-appeal motions are final.
The U.S. attorney's office in Boston expressed disappointment about the ruling.
"Today a Florida appeals court, in a split decision, reversed itself after unanimously affirming John Connolly's murder conviction three years ago. The decision is surprising and disheartening," the office said in a statement. "This case was hard fought and led to the successful prosecution of a deeply corrupt federal agent. We intend to urge the Florida Attorney General to challenge this decision."
Connolly allegedly accepted payoffs and, in turn, tipped off Bulger and his associate Stephen "The Rifleman" Flemmi to the identities of cooperating witnesses and pending investigations, according to information revealed in court during Bulger's racketeering trial last year.
Connolly was serving a 40-year sentence on second-degree murder charges for allegedly leaking the identity of Callahan, who had agreed to cooperate against Bulger's Winter Hill Gang.
During the first two decades of his FBI career, Connolly won kudos in the bureau's Boston office, cultivating informants against New England mobsters. Prosecutors during his trial said Connolly was corrupted by his two highest-ranking snitches: Bulger and Flemmi.
Connolly retired from the FBI in 1990 and later was indicted on federal racketeering and other charges stemming from his long relationship with Bulger and Flemmi. He was convicted of racketeering in 2002 and was serving a 10-year federal prison sentence when he was indicted in 2005 in the Callahan slaying.
CNN's Jean Casarez, Sunny Hostin and Rich Phillips contributed to this report.