Pir Khan is charged with entering the country illegally, but a judge continued the 43-year-old's immigration hearing until October and allowed him to go free without bail.
Khan's attorney, Saher Marcarius, says Khan deserves to stay in the country, and releasing him shows what the two have long argued -- that Khan was never connected to Faisal Shahzad, who in June pleaded guilty to attempting to explode a bomb in New York City's Times Square on May 1.
"The government overreached by arresting him before they conducted proper investigation to find connection," Marcarius said.
Marcarius said he hopes Khan will now be granted legal residency.
"He was released from custody," Marcarius said. "If the government wanted to charge him with any crime, they would not have released him from custody. And, as I said from the beginning, my client has no connection with the Times Square bomber."
Khan has been married to an American woman since 2008.
This program aired on August 10, 2010. The audio for this program is not available.