Police seized Dutch Harbor Asia on May 24. (Courtesy of Patrick Cyr)

State prosecutors have dropped their case against two Unalaskans accused of running a major drug operation out of their home and business. Now, it's up to a federal court to determine the outcome.

Tam Nguyen and Thu McConnell were arrested in May after police tied an alleged heroin sale back to their convenience store.

When officers searched the Dutch Harbor Asia shop and the couple’s home on Biorka Drive, they found one of the biggest caches of methamphetamine, heroin and cocaine they had ever seen in Unalaska. The street value was more than $500,000.

A grand jury indicted Nguyen and McConnell on multiple felony counts this summer. That paved the way for a trial in state court.

But last week, assistant district attorney Laura Dulic signed an order dismissing all charges against the defendants ”without prejudice.”

Dulic did not respond to repeated requests for comment.

According to a press release from the Alaska Attorney General's Office, the decision came after talking with federal prosecutors.

Nguyen has also been indicted in U.S. District Court. And federal sentences are tough when it comes to distributing drugs and possessing firearms.

But those charges are based on evidence collected by Unalaska police. And defense attorneys have been fighting to get most of that thrown out of both state and federal court.

The attorneys argue that Unalaska police didn’t have probable cause to conduct searches back in May -- when they traced an alleged drug sale to Dutch Harbor Asia.

It all started when officers asked a criminal informant to help them buy drugs in the community. The informant reached out to a man named Eric Roach, who allegedly paid a visit to Dutch Harbor Asia.

After that, Roach allegedly gave two packets of heroin to the police informant. And officers swooped in. They seized the store and detained Tam Nguyen while they waited for a magistrate to approve their first warrant.

In a motion filed in state court in August, David Mallet argued that “the police did not exert any of the standard control over any suspected drug buy between Roach and the defendant [Tam Nguyen].”

Mallet alleged that the police did not search Eric Roach to see if he was carrying drugs before he went into the store. Mallet said there’s no recording of the alleged sale -- and no concrete proof that his client sold drugs.

Without that, Mallet argues that there’s no justification for a search warrant. The attorney defending Nguyen in federal court has made similar arguments.

The Unalaska police department is not commenting on the case until it’s resolved, according to deputy chief Mike Holman.

A federal judge is scheduled to consider Tam Nguyen's request to dismiss evidence in January. In the meantime, Nguyen will stay in jail.

But his partner doesn’t have to. Now that the state’s case is closed, Thu McConnell has been released from custody.