An investigation has concluded then-US Attorney Alex Acosta exercised "poor judgment" by allowing financier Jeffrey Epstein to enter a non-prosecution agreement over alleged sex crimes.
At the same time, the Justice Department probe clears Acosta and other prosecutors of professional misconduct in their handling of the case.
The department said on Thursday when Acosta let Epstein enter the agreement in 2008 that spared him from federal sex-trafficking charges, he "failed to make certain the state of Florida intended to and would notify victims identified through the federal investigation about the state plea hearing".
It said while no federal prosecutors engaged in wrongdoing, Epstein's victims "were not treated with the forthrightness and sensitivity" they deserved.
It added Acosta's decision to resolve the federal investigation through the non-prosecution agreement "constitutes poor judgment".
The agreement with Epstein has come under intense scrutiny following an investigation by the Miami Herald.
Under its terms, Epstein pleaded guilty to lesser state charges and served a brief jail stint where he was granted work release.
At the time, Acosta was serving US attorney for the Southern District of Florida.
Last year, federal prosecutors in New York resuscitated the case and charged Epstein with sex trafficking of minors.
Acosta, who was then labor secretary under President Donald Trump, initially tried to defend his role in the previous Epstein investigation but quickly resigned amid growing pressure.
Epstein was found dead in his New York jail cell of an apparent suicide about a month later.
In a statement released by his attorney on Thursday, Acosta said the finding by the Office of Professional Responsibility "fully debunks allegations" his office had "improperly cut Epstein a 'sweet-heart deal' or purposefully avoided investigating potential wrongdoing by various prominent individuals".
He added that the Epstein case was now "vastly more lurid and sweeping" than previously known in 2008.
The findings by the Office of Professional Responsibility, which investigates misconduct by Justice Department personnel, were announced earlier on Thursday by Republican Senator Ben Sasse of Nebraska.
He blasted the agency for not taking a more forceful stance.
"Letting a well-connected billionaire get away with child rape and international sex trafficking isn't 'poor judgment' - it is a disgusting failure," Sasse said.
Earlier this year, Epstein's longtime friend Ghislaine Maxwell was arrested in connection with the case, and has pleaded not guilty to charges she lured underage girls so he could abuse them.