A trial between the SEC and embattled businessman Steve Chen is set for January 10th, 2017, according to a joint report filed this April. The civil case targets Chen and his firm USFIA over financial fraud allegations, with criminal charges still to come.

The stakes are already high, and the two sides are already clashing over the basics.

The SEC wants discovery wrapped up by November 18th, 2016. Chen wants to drag it out in phases, with his own testimony saved for last. His reasoning: the allegations are sprawling, and pushing discovery into 2017 makes more sense. The SEC isn't buying it. Prosecutors worry that Chen's testimony will only reveal the need for more discovery down the line, making his phased approach a delay tactic. If Chen gets his way, trial wouldn't happen until late 2017.

Then there's the amber problem.

A court-appointed receiver determined that USFIA's amber reserves had "limited intrinsic value." Not exactly a glowing assessment. Yet Chen has specifically requested that all amber and gemstones seized from USFIA be preserved. He hasn't explained why. The most likely play: Chen plans to produce some friendly third-party expert willing to declare the amber valuable after all, then tell investors they got something worthwhile in return. It's a classic move in fraud cases.

The real trouble may be brewing between Chen and his own lawyers.

Chen invoked his Fifth Amendment right against self-incrimination but still filed eleven affirmative defenses in his answer to the SEC complaint. One of them claims he relied in good faith on legal advice. That's a massive mistake. The SEC immediately signaled it will hunt for communications between Chen and his lawyers to see what legal guidance he actually received. If those conversations were just rubber-stamping of sketchy compliance schemes, prosecutors will have ammunition. Chen's lawyers could face their own scrutiny.

The plot thickens because a receiver currently controls those attorney-client communications. The receiver can waive attorney-client privilege if it chooses. Chen will almost certainly object if it comes to that. But his objections will likely fail. The fact that he's fighting so hard to keep those communications secret suggests they contain damaging material.

Criminal charges against Chen haven't surfaced publicly yet, but they're coming. Expect details before the January 2017 trial date. For now, the civil case is setting the table. Discovery disputes, overvalued assets, suspicious legal advice—these are the pieces moving into place. When criminal prosecutors make their move, they'll probably have plenty to work with.

🤖 Quick Answer

What is the SEC case against Steve Chen and USFIA?
The SEC filed a civil lawsuit against businessman Steve Chen and his firm USFIA, alleging financial fraud. The case is scheduled for trial on January 10th, 2017. Criminal charges are expected to follow the civil proceedings. Both parties are currently disputing discovery procedures and timelines.

Why does Chen oppose the SEC's discovery deadline?
Chen requested a phased discovery approach, arguing that the allegations are complex and sprawling in nature. He proposes delaying discovery into 2017 and reserving his personal testimony for last. The SEC rejected this proposal, suspecting it functions as a delay tactic that could prolong litigation.

What are the SEC's concerns regarding Chen's proposed timeline?
SEC prosecutors fear that Chen's testimony may reveal additional discovery needs, making his phased approach potentially counterproductive. The agency contends that completing discovery by November

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