The 9th U.S. Circuit Court of Appeals on Wednesday set aside Joseph Medawar's sentence, which was a fraction of what prosecutors sought and even less than his own attorney requested.
A three-judge panel decided that U.S. District Judge Manuel Real "committed procedural error" in not using federal guidelines to determine Medawar's sentence and ordered that he be re-sentenced.
Guidelines called for 57 to 71 months in prison, and prosecutors had asked for 57.
The panel also said Real did not provide a "significant justification" for giving the sentence.
Medawar, 46, pleaded guilty in May 2006 to tax evasion and conspiracy to commit mail and wire fraud, admitting fleecing about 50 people of millions of dollars. He could now face further prison time.
Prosecutors said Medawar's lies included telling investors that President Bush endorsed the series and that Homeland Security approved use of its name and seal for the TV show.
They said he claimed 26 episodes of "DHS" were in post-production and that the company had distribution deals with 137 overseas markets. Investigators found that only one episode had been shot, and only after Medawar became aware of the federal probe.
The U.S. Attorney's Office in Los Angeles, which appealed Medawar's sentence, had no comment on the ruling.
Defense attorney Daniel Snider said: "We are very happy with the court's ruling. The 9th Circuit has done what was expected in sending the case back to Judge Real for further explanation of his reasoning."
Real, a federal judge since 1966, has received several rebukes from the appeals court, including a reprimand last year that said he had shown a "pattern and practice of not providing reasons for his decisions when required to do so."