From what I understand of the guy I'm not a fan and likely would like to see him nailed.
However, in this case...I don't think the govt has a case against him.
If they never got into the phone, how do they know there was evidence on there? How could they proved he wiped evidence if they had no clue what might be on there?
It also sounds like at the time, he wasn't under arrest? He had asked for a lawyer and had been refused?
He's not under any compulsion to give a password is he? They had the phone, nothing forced the authorities to trust anything he said....they could have tried forensics like they'd do if they had a safe and tried a safecracker to get in if the suspect didn't want to give the combination.
I just don't see the case they have....or if they do it has implications far wider for common citizens and their privacy.