MOBILE, Alabama (WALA) – Lawyers for three former Austal USA executives ask a federal judge to dismiss criminal fraud charges related to accusations that they misled investors.

A grand jury indicted Craig Perciavalle, who at the time was president of the shipbuilder; Joseph Runkel, the company’s director of financial analysis; and William Adams, former director of the littoral combat ship program.

Prosecutors allege that the defendants conspired to understate the cost of building littoral combat ships. They say he artificially inflated the company’s stock price from 2013 to 2016, ultimately forcing Austal to write down more than $100 million.

But lawyers for the defendants argue in a court filing that previous rulings by the U.S. Supreme Court make clear that federal anti-fraud statutes do not apply to this case.

“First, the prosecution inadmissibly alleges a plan that had neither money nor property as its object,” the file states. “Indeed, the indictment lacks any allegation that any person or entity was deprived, or intended to be deprived, of anything at all. Under a generous reading, it comes close to alleging that “shareholders and the investing public” were deprived of accurate information, but the Supreme Court has recently held that such a right is not a recognized property interest within the meaning of the wire fraud law. . “

A federal judge gave the U.S. Attorney’s Office until Friday to respond.

The defense presentation argues that the alleged conduct is not a crime under the law.

“Because the indictment does not establish a crime, and because its defects cannot be cured, it must be dismissed with prejudice,” the filing states.

In August, Austal pleaded guilty to a criminal charge and agreed to pay $24 million to settle the case brought by the Justice Department. In addition, the Department of Justice has a pending matter civil lawsuit against those accused in the criminal case.

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