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CAMP PENDLETON, Calif., Aug 2 (Reuters) - A U.S. Marine squad leader who told his men "We just got away with murder" after they kidnapped and killed an Iraqi grandfather in Iraq last year was found guilty on Thursday of murder and other charges.

A military jury in a Camp Pendleton Marine Corps Base courtroom, north of San Diego, found that Sgt. Lawrence Hutchins III committed unpremeditated murder and larceny, made false official statements and participated in conspiracy to murder and commit other crimes in the killing.

He was found not guilty of additional charges of kidnapping, assault and housebreaking.

Witnesses said Hutchins led the unit in planning to kidnap and kill a terror suspect in the middle of the night. But when the unit could not find the suspect, they randomly executed Hashim Ibrahim Awad, 52, a father of 11 and grandfather of four who lived next door.

After Hutchins shot the man in the head, the squad then set a stolen AK-47 and shovel next to the corpse to suggest he was an insurgent planting a roadside bomb.

In an earlier trial, Petty Officer Melson Bacos said Hutchins' anger over the release of a suspected "terrorist" from Baghdad's Abu Ghraib prison prompted the murder of the man's neighbor.

"He was just mad that they kept letting him go when he was a known terrorist, sir," Bacos said.

The prosecutor in the case, Lt. Col. John Baker, said in closing arguments that Hutchins masterminded "a cold and calculated plan ... to take the law into his own hands."

'OUTSTANDING MARINE'

Hutchins' lead defense attorney, Richard Brannon, countered that the actions of Hutchins and his men was "a failure of command," alluding to allegations that their platoon leader's rough handling of some detainees sent the wrong message to the Marines.

Brannon described Hutchins, 23, from Plymouth, Massachusetts, as an "outstanding Marine" who led his infantry squad in a dangerous area where troops had to battle stress and attacks from insurgents. "They were under fire," Brannon told the jury. "It does impact you."

Hutchins, who was on his first combat tour, and his men were frustrated because suspected insurgents they captured, including the man they wanted to target, often were later freed, he said.

"These men were led the wrong way, they were put in the wrong place, they were asked to do the wrong things," Brannon added. "They didn't mean for it to happen the way it did."

Hutchins was charged with premeditated murder, conspiracy, kidnapping, larceny, housebreaking, assault, obstructing justice and lying to investigators. The jury will now begin considering his sentence.

Hutchins is one of seven U.S. Marines and one U.S. sailor with the 3rd Battalion, 5th Marine Regiment, charged in the April 26, 2006, killing of the Iraqi in Hamdania.

Five members of the squad, including the Navy medic, pled guilty to lesser charges in connection with the shooting. A military jury convicted a sixth member, team leader Cpl. Trent Thomas, of conspiracy and kidnapping and sentenced him to reduction to private, forfeiture of all military pay and benefits and a bad-conduct discharge.

A separate military jury on Wednesday found Cpl. Marshall Magincalda guilty of larceny and housebreaking as well as conspiracy to murder.

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