Jacob Ostreicher, a 53-year-old investor in a Bolivian rice growing venture, was accused of money laundering when he was arrested June 2011. Ostreicher claims authorities trumped up the charges to extort money from him, and he spent 18 months in jail in the eastern city of Santa Cruz without being charged.

"Today we have secured the release of my client. We are relatively satisfied," attorney Jimmy Montano told reporters. He said Judge Eneas Gentile ordered the American released on a bond worth $14,300 and monitored house arrest.

Penn, whose activism on behalf of humanitarian causes has made him a well known figure in Latin America, personally attended a court hearing for wheel-chair bound Ostreicher this month in Santa Cruz.

"We kept saying that first we were interested in getting him out" of pre-trial detention, Montano said.

"Now, it is time to get to the bottom of the accusations, and we will keep going until they are cleared up."

Some Bolivian authorities claimed the American may have been laundering money for a Brazilian drug dealer.

The case has caused a major scandal in Bolivia, as even the government has admitted the existence of a network of government lawyers and prosecutors who engaged in extorting prisoners.

About 10 people have been detained as part of an official investigation into the extortion not only of Ostreicher, but also opposition politicians and common criminals.