A joint-stipulation filed by the SEC and Steve Chen on September 30th had asked for a delay in proceedings of four months.

Judge Klausner has rejected the rescheduling and preserved the
original
January 10th trial date.

At the heart of the requested delay is ongoing issues with discovery.

The SEC and Steve Chen have been working to complete discovery within the current deadline but … will not be able to do so.

The USFIA Receiver has also yet to complete accounting, which means the ‘
the scope of USFIA’s business
‘ has yet to be determined.

Currently the Receiver estimates
USFIA conducted $180 million in Ponzi fraud
through 64,000 affiliates.

To date the SEC and Chen have deposed three of the four witnesses cited in the
SEC’s TRO filing
.

Chen is seeking additional time to conduct discovery on the basis he

believes (there) are inconsistencies between the deposition testimony of those witnesses and the Declaration of Peter Del Greco, one of the SEC’s trial counsel.

Chen is seeking to depose Del Greco and two agents from the FBI and IRS.

Chen is currently engaged in ‘
ongoing discussions with the United States Attorney’s Office regarding these depositions
‘.

It is unlikely that Mr. Chen will receive approval (or denial) of his request to depose the agent witnesses before the current close of discovery.

The SEC have already signaled they will oppose the deposition of Del Greco.

Expert discovery is also cited as a possible reason for delay.

Currently the SEC have indicated they wish to call “at least one expert witness”. Chen has indicated he ‘
may call as many as four expert witnesses
‘.

New dates proposed by the SEC and Chen are as follows:

Exchange initial expert disclosures and reports – December 14, 2017 (I believe a typo, should be 2016)

Exchange of rebuttal expert reports – January 4, 2017

Expert discovery cut-off date – January 18, 2017

Motion cut-off date – February 17, 2017

Pretrial conference – April 10, 2017

Jury trial – May 9, 2017

In a October 4th order, Judge Klausner set the following dates:

Discovery cut-off – November 2nd, 2016

Motion cut-off date – October 26th, 2016

Pretrial conference – December 19th, 2016

Jury trial – January 10th, 2017

The SEC are expected to file a protective order seeking to bar Chen’s deposition of Peter Del Greco early this week.

Stay tuned…

Update 17th October 2016 – 
A Joint Stipulation has been filed, in which the SEC argue to quash Del Greco’s deposition notice. Steve Chen argues for it.

A hearing on the matter has been scheduled for November 8th.

🤖 Quick Answer

Why did Judge Klausner reject the delay request in the USFIA Ponzi case?
Judge Klausner rejected the joint-stipulation filed by the SEC and Steve Chen seeking a four-month delay, preserving the original January 10th trial date despite ongoing discovery issues and incomplete accounting by the USFIA Receiver regarding the scope of the fraudulent operation.

What discovery challenges prevented meeting the current deadline?
The SEC and Steve Chen were unable to complete discovery within the established deadline. Additionally, the USFIA Receiver had not finished accounting procedures necessary to determine the complete scope of USFIA's business operations and the full extent of the alleged $180 million Ponzi fraud scheme.

How many witnesses have been deposed in this case?
As of the filing date, the SEC and Steve Chen had deposed three of the four witnesses cited in the SEC's Temporary Restraining Order filing,

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