NMAC BTWN AN ACR LTT TURBOPROP DSNDING FOR LNDG AND A TWIN ENG CESSNA CLBING. TCASII RA ALERTED THE RPTR WHO RESPONDED BY INCREASING DSCNT. ATC THEN ISSUED A TA AND THE RPTR TOOK EVASIVE ACTION TURN TO AVOID INTRUDER WHEN SIGHTED. MODE C ALT READOUT OF TWIN CESSNA WAS INDICATING ERRONEOUS ALT.

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AT APPROX 40 NM NW OF MZB VOR; WE WERE BEING RADAR VECTORED AND ON A HDG OF 120 DEGS AT 9000 FT AND RECEIVED A CLRNC TO 7000 FT. AT 8400 FT WE RECEIVED AN RA TO DSND (APPROX 1800 FPM GREEN ARC). ATC ISSUED TFC AT 12 O'CLOCK POS AND 1.5 MI AT 7500 FT CLBING VFR AND ASKED US TO STAY AT 9000 FT. WE TOLD ATC WE WERE UNABLE AND IN A TCASII DSCNT FOR AN RA. A MOMENT LATER I SAW THE TFC AND BANKED 30 DEGS R TO AVOID HIM. THE OTHER ACFT (TWIN CESSNA) ALSO BANKED TO HIS R TO AVOID ME. WE WERE LESS THAN 300 FT FROM EACH OTHER. WE LEVELED OFF AT 7000 FT AND QUESTIONED ATC ON WHAT HAPPENED. HE TOLD US THAT HE WAS TALKING TO THE ACFT AND THAT HIS XPONDER MODE C WAS IN ERROR. HE (THE TWIN CESSNA) WAS CLBING VFR TO 7500 FT AND HIS MODE C READ 10500 FT. THE UNUSUAL PART ABOUT THIS RA WAS IF HIS READOUT WAS SO HIGH (1500 FT ABOVE US) WHY DID WE GET AN RA TO DSND? AND WHY DID ATC ISSUE A CLRNC TO DSND TO 7000 FT WHILE THIS TFC WAS SO CLOSE? CONCLUSION: THERE WAS NO EXCESSIVE CORRECTIVE ACTIONS TAKEN AND NO INJURIES. ALL COMPANY TCASII PROCS WERE FOLLOWED. I BELIEVE THAT THE TFC (TWIN CESSNA) SHOULD HAVE STOPPED HIS MODE C (ALT) READOUT AFTER IT WAS KNOWN TO BE IN ERROR AND THE CTLR SHOULD HAVE DELAYED THE DSCNT CLRNC AND ISSUED TFC INSTEAD.