Monday, February 22, 2010, 2/22/2010 10:17:00 AM

Federal Prosecutors in Starwood v. Hilton Criminal Investigation Ask Federal Civil Judge to Stop the Proceedings for Six Months

By Todd

We've been reporting about this high-level trade secret theft case, see here:

BusinessWeek is reporting that in a unique procedural move, the federal prosecutors investigating this matter as a crime have intervened and asked the federal judge assigned to the civil lawsuit to "stay" or suspend the civil proceeding.

The office of Manhattan U.S. Attorney Preet Bharara asked U.S. District Judge Stephen C. Robinson in White Plains, New York, to suspend the production of documentary evidence and the taking of depositions in the lawsuit. The motion was filed on February 19th.

“Shortly after the filing of Starwood’s complaint, the government initiated an investigation into these allegations,” Bharara’s office said in the filing.

A six-month stay of the exchange of evidence in the case would prevent the government’s investigation from being compromised by the more liberal rules controlling the flow of information in civil lawsuits, Bharara’s office said.

Hilton issued a statement in April acknowledging receipt of a federal grand jury subpoena concerning the Starwood claims, seeking documents related to the executives’ employment and to the materials they’re accused of taking.

Those materials were returned to Starwood last February, according to Hilton’s statement.

It is not common for the federal criminal prosecutors to seek such a stay. We'll keep an eye on this one for you.


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