ROCHESTER - A federal appeals court on Wednesday overturned the convictions of two brothers imprisoned in 2003 for conspiring to defraud dozens of banks out of $58 million in mortgage loans.

The U.S. Second Circuit Court of Appeals in New York City ruled that U.S. District Judge Charles Siragusa should have recused himself from the homebuilders' trial when a star prosecution witness claimed he had once helped the judge fraudulently obtain a mortgage.

The ruling opens up the possibility of either plea deals or new trials for Robert Amico, 44, who was sentenced to 17 years in prison, and his brother, Richard, 36, who drew a nine-year sentence. “If we have to try it again ... we're obviously ready to proceed,” U.S. Attorney Terrance Flynn said.

Robert Amico was convicted of conspiracy, bank fraud, mail fraud and operating a continuing criminal enterprise in violation of a law enacted to protect federally insured financial institutions. Richard Amico was found guilty of conspiracy and mail fraud.

In March 2003, nearly four months into their trial, charges against their father, Robert A. Amico, a construction tycoon accused of orchestrating the scheme between 1994 and 2000, were put on hold when he was diagnosed with cancer. He died seven months later. Prosecutors said the Amicos built 185 homes in the Rochester suburbs and, using falsified documents, induced 53 financial institutions around the nation to lend them up to twice as much as the houses were worth.

The Federal Bureau of Investigation and the Internal Revenue Service began investigating in 1998 after people who bought the houses realized they were not worth nearly as much as they were led to believe and defaulted on their loans. The defense maintained the Amicos did not intentionally commit fraud and that lenders were partly to blame for disbursing high-interest loans despite evidence of loan-application irregularities.

At the start of the trial, both the defense and the prosecution asked Siragusa to step down after Patrick McNamara, a former mortgage broker, alleged he'd made fraudulent representations on a mortgage application in 1987 to make it easier for Siragusa - then a county prosecutor - to get a mortgage. Siragusa rebutted McNamara's assertion and maintained he could be impartial. But the appeals court said his decision ran the risk of undermining public confidence in the judiciary.