In a Nutshell

*Charlie Jinan Chen allegedly used illegal insider information to make trades in Vistaprint’s stock that netted him more than $800,000.

*A Monday status conference on the case indicated a plea deal has not been discussed, among other findings.

A case involving a Massachusetts’ man accused of using illegal insider information to make profitable trades in Vistaprint’s stock could be headed for trial. Vistaprint, a web-based seller of customizable business materials and promotional products, is owned by Top 40 distributor Cimpress (asi/162149).

Following a status conference Monday in U.S. District Court in Boston, Magistrate Judge David H. Hennessey wrote in a report that prosecutors and lawyers for the accused, Charlie Jinan Chen, have held no plea discussions. “The parties anticipate that this case will be resolved by trial and not plea,” Hennessey wrote. “A trial would require one and a half weeks.”

A status conference before the anticipated trial is scheduled for September. The complicated white collar case has produced tomes of documents – some 12,000 pages of automatic discovery. Hennessey wrote that there are additional discovery requests on the table – and that Chen’s lawyers need more time to determine if they’d like to make additional discovery requests. “Defendant anticipates filing a motion to suppress statements and possibly to suppress evidence obtained by warrants to search email accounts,” Hennessey also noted.

Chen, who was 48 at the time of his April 2018 indictment, is facing three counts of securities fraud and one count of making a material false statement. Federal authorities say he obtained private financial data about Vistaprint from a former employee and her husband. He then used the illegal insider information to make trades in the firm’s stock that netted him more than $800,000, authorities maintain.

According to the criminal charges, the former Vistaprint employee, who resigned in 2015, worked in the company’s financial planning and analysis department. Her duties included preparing and reviewing Vistaprint’s quarterly earnings data before it was public. Between July 2012 and July 2014, Chen allegedly obtained Vistaprint’s financials from the couple in advance of the information’s official release. Leveraging his unfair advantage, Chen engaged in “put and call” option trading, correctly predicting how Vistaprint’s stock price would change following earnings announcements, according to the indictment.

“In the final two quarters of 2014, Chen profited more than $800,000 by correctly predicting the direction of the change in the company’s share price following the company’s earnings announcements,” the FBI said in a news release.

Chen allegedly used a portion of the proceeds of the insider trading scheme to purchase a condominium in Stoneham, MA.

Authorities assert that Chen also lied to federal agents. He allegedly told them he could not remember his option trading on Vistaprint, even though it was the largest position he had taken in any stock and had amassed him $800K in profits in just three months. Chen also claimed that the former Vistaprint employee’s spouse was an acquaintance, rather than a close friend, the FBI said. However, Chen and his family socialized extensively with the other couple, even vacationing together in places like Hawaii and Europe, the indictment stated.

If convicted of a securities fraud charge, Chen faces a potential maximum of 20 years in prison, three years of supervised release and a fine of up to $250,000. The charge of making a materially false statement provides for a sentence of no greater than five years in prison, one year of supervised release and fine of up to $250,000.