But U.S. District Judge Mark Wolf told prosecutors during a court hearing that dismissal of the indictment is "not automatic" and that he would give Bulger's provisional attorney, Peter Krupp, a day to consult with Bulger to see whether he objects to the dismissal.
The earlier indictment, which charged Bulger with extortion, loan sharking, witness tampering and conspiracy, prompted Bulger to flee Boston just before it was handed up in early 1995. He remained a fugitive until last week, when he was apprehended in Santa Monica, Calif., with his longtime girlfriend, Catherine Greig.
Krupp told Wolf the decision to drop the first indictment appears to be "forum shopping" on the part of prosecutors, an apparent reference to the fact that Wolf - who has presided in that case since 1995 - would no longer be the judge overseeing the Bulger prosecution. U.S. District Judge Richard Stearns is assigned to the 1999 indictment, which includes the murder charges.
Wolf is the judge who held hearings in the 1990s that exposed the Boston FBI's corrupt relationship with Bulger and his cohort, Stephen "The Rifleman" Flemmi.
Both gangsters were FBI informants who provided the agency with information on the Mafia, their main rivals. Former FBI agent John Connolly Jr. was convicted of racketeering and obstruction of justice for protecting Bulger and Flemmi from prosecution.
The proposed dismissal of the earlier indictment prompted Wolf to postpone a decision on whether Bulger is indigent and therefore entitled to a taxpayer-funded attorney.
Prosecutors have objected to giving Bulger a public defender, citing the more than $800,000 in cash they found in Bulger's apartment and "family resources," including potential help from his brother, former Massachusetts state Senate President William Bulger.
Krupp said in court documents that no one in Bulger's family has come forward to offer him help in paying for his defense.
U.S. Attorney Carmen Ortiz said prosecutors want to dismiss the earlier indictment because they consider the 1999 indictment charging Bulger with 19 murders the stronger case. He faces life in prison on those counts.
Ortiz also cited the long wait the families of the murder victims have had to endure for authorities to find Bulger, now 81.
"The 19 families of murder victims have been denied justice for many years because the defendant has successfully eluded law enforcement apprehension," Ortiz said in court documents.
"And given the age of the defendant, there is also a substantial public interest in ensuring that the defendant faces the most serious charges before the end of his natural life."
Ortiz also said the 1994 case could be subject to a legal challenge, namely that because Bulger and Flemmi were FBI informants, they were essentially acting on behalf of the FBI when they committed the crimes in that indictment.
The 1999 indictment would not be subject to that legal challenge, Ortiz said in the court filing.
During the hearings before Wolf, Flemmi testified that he and Bulger believed they were authorized by the FBI to commit crimes as long as they provided the agency with information on the Mafia. But he said they were never authorized to commit murders, which is the focus of the 1999 indictment prosecutors are moving forward with.
Bulger, wearing an orange prison jumpsuit, did not speak during the hearing, except to consult quietly with his lawyer. Wolf said he may hold a hearing Thursday after hearing from Bulger's lawyer on the proposed dismissal of the indictment.
Thomas Donahue, the son of Michael Donahue, a man allegedly killed by Bulger in 1982, said he is glad prosecutors plan to focus on the indictment that includes the murders.
"He's an old man. Time is not on our side. I think it's a good idea to fast-track it," said Donahue, who was in court for the hearing Tuesday.
Two prominent Boston attorneys, Max Stern and Howard Cooper, were in court and expected to be appointed to represent Bulger, Cooper said. But the prosecution's move to dismiss the 1994 indictment made the appointment unclear. Wolf scheduled a hearing for Thursday.
"It's still up in the air," Cooper said as he left the courthouse.
Connolly, the former Boston FBI agent who was convicted of protecting Bulger and Flemmi, was scheduled to finish his 10-year sentence in that case Tuesday. He was expected to be transferred immediately to a Florida prison to begin serving a 40-year sentence in the 1982 killing of gambling executive John Callahan in Miami. Connolly is appealing that conviction and sentence.
When Bulger was apprehended in California last week, authorities found more than $800,000 in cash and more than 30 weapons. They also found two cell phones and other items they are analyzing to determine whether he hid additional cash in other locations and who might have helped him when he was on the run.
Kevin Weeks, a former top lieutenant to Bulger, said in an interview with The Associated Press on Tuesday that Bulger began preparing for a life on the run in the 1970s by acquiring false identifications and stashing cash in various locations.
"He did say, `Once you're on the run, you have to cut ties with everybody,"' Weeks said.