The U.S. Attorney's office will not confirm.
Prosecutors contacted Robert Blagojevich's legal team yesterday, according to sources, asking if they would agree to have their case severed in a separate trial. They said no. It was only after that, today, that prosecutors told them (just before court) that they were dropping all charges against Robert.
The reasons are very obvious.
Robert had been a good witness. He was impressive on the stand. And what's more, he said in his testimony that he was always told to do everything by the book. He hurt the government's case, and indirectly made his brother look better.
Prosecutors had built a case suggesting that the Blagojevich administration was loaded with less-than-ethical individuals who freely mixed fundraising with government action. Robert said he was always told never to mix the two, and that any time government issues came up, Rod and his aides would leave the room to talk about them (to make sure that his fundraising role never mixed with the actual government side).
Robert hurt the government's case against Rod. And since Rod was the big fish they really wanted, it was much easier for them to cut him out.