Lawyers for former Austal executives ask judge to dismiss federal fraud charges

MOBILE, Ala. (WALA) – Lawyers for three former Austal USA executives are asking a federal judge to dismiss criminal fraud charges related to allegations they misled investors.

The grand jury indicted Craig Perciavalle, who was president of the shipbuilding company at the time; Joseph Runkel, the company’s director of financial analysis; and William Adams, former director of the Littoral Combat Ship program.

Prosecutors say the defendants conspired to underestimate the cost of building littoral combat ships. They say the company artificially inflated the company’s share price between 2013 and 2016, ultimately forcing Austal to write down more than $100 million.

But lawyers for the defendants argue in a court filing that previous U.S. Supreme Court decisions make it clear that federal fraud laws do not apply to this case.

“First, the indictment impermissibly alleges a scheme in which neither money nor property was the object,” the lawsuit states. “Indeed, the indictment is devoid of any allegation that any person or entity was, or intended to be, deprived of anything at all. On careful reading, this comes close to saying that “shareholders and investors” were deprived of accurate information, but the Supreme Court recently ruled that any such right is not a cognizable property interest within the meaning of the wire fraud statute. »

A federal judge gave the U.S. attorney’s office until Friday to respond.

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

“Because the indictment does not state a crime and because its deficiencies cannot be corrected, it should be dismissed with prejudice,” the lawsuit states.

In August, Austal pleaded guilty to criminal charges and agreed to pay $24 million to settle a case brought by the Justice Department. In addition, the Ministry of Justice is considering a civil lawsuit against the defendants in the criminal case.

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