On the day Mary Anne Henry filed her response with the court, the defense filed an entirely new set of motions. In them, the defense sought to suppress John Peel’s statements to police on three separate occasions:
- First, they sought to suppress statements taken from him on or about September 18, 1982, at the Holiday Inn in Bellingham.
- Second, they sought to suppress statements taken from him on or about November 21, 1983, at the Bellingham Police Department.
- Third, they sought to suppress statements taken from him in March of 1984, at the Bellingham Police Department.
But the defense was not finished — there were three other statements they sought to suppress. These included “statements taken surreptitiously while the Defendant believed he was alone in the interrogation room in March of 1984.” 
Also included were statements “on or about September 8th or 9th of 1984,” in which Stogsdill had “surreptitiously tape-recorded Mr. Peel and/or Mr. Peel’s wife” after being informed that Peel was “going to get a hold of his lawyer.” Finally, the defense sought to suppress statements taken from Peel at the time of his arrest.
But the real opportunity for the defense lay elsewhere.
After months of deliberation, Judge Schulz finally acted. In an August 30 conference call to all the parties involved, he announced he was dismissing the indictment against John Peel. His decision, however, was based on the narrowest of legal grounds. The judge explained that he had reviewed thousands of pages of statements, depositions and grand jury testimony. He hadn’t found significant evidence of perjury, he told the lawyers. Neither had he found that witnesses were intimidated nor that the police investigation had been bungled. And Schulz refused to accept defense allegations of prosecutorial misconduct.
“There is simply no factual basis to support the claims the defense made regarding prosecutorial misconduct,” the judge said. “Most of those allegations — the overwhelming majority — are simply allegations.”
The judge’s decision turned on a single point: the way prosecutors presented their arson evidence to the grand jury. The jurors heard a witness testify that he had seen someone resembling John Peel buy gasoline on the day of the fire, Schulz said. But what the prosecution neglected to tell the grand jury was that their own arson report found only white gas on the Investor. Those two hydrocarbons are not the same.
In dismissing the indictment, however, Schulz refused to accept the defense motion to “dismiss with prejudice,” which would have stopped further prosecution of Peel. After careful consideration, Schulz said he found no cause for dismissing the murder charges outright. “It’s not clear to me the evidence, properly presented, is going to change the result” of a murder and arson indictment against Peel, the judge noted. “Substantial evidence supports holding him for trial.”
Those findings set the stage for his other important ruling. In dismissing the indictment, Schulz added that the state had 45 days to re-indict Peel or win an appeal of the dismissal in the state Court of Appeals. Schulz also decided that Peel would remain in custody of his parents on $1.1 million bail.
 Troopers left the tape recorder running while Peel waited in the interrogation room for his polygraph test to begin. Peel talked to himself aloud during the interim. The prosecution considered those statements proof of Peel’s guilt. The defense thought differently, but still didn’t want them introduced at trial.
Excerpts from the unpublished original manuscript, “Sailor Take Warning,” by Leland E. Hale. That manuscript, started in 1992 and based on court records from the Alaska State Archive, served as the basis for “What Happened in Craig.”
Copyright Leland E. Hale (2019). All rights reserved.