(Bloomberg) -- Archegos Capital Management’s Bill Hwang asked a judge to toss out fraud charges against him because prosecutors allegedly engaged in “deceitful” conduct in the early days of the government’s probe.

Hwang was duped into assisting the government in a number of meetings with investigators who didn’t tell him when they’d decided he was more than a mere “subject” of the probe, leaving open the possibility that he wouldn’t be charged, his lawyer said in a motion to dismiss the indictment late Friday. Hwang is scheduled to go on trial in October 2023. 

“The government had made its decision long before numerous sessions in which the government elicited information from Mr. Hwang and his counsel that would never have been revealed but for the misimpression, fueled by the government, that the decision of whether to indict had not been made,” Hwang’s lawyer, Lawrence Lustberg, said in a filing in federal court in Manhattan.

Hwang and former Archegos Chief Financial Officer Patrick Halligan, who will go on trial with him, have pleaded not guilty. Hwang was arrested April 27 and charged with fraud over the collapse of Archegos, which at one point held market positions valued at $160 billion, according to prosecutors. The two face decades in prison if convicted.

The press office for the US Attorney’s Office in Manhattan declined to comment.

Hwang first started meeting with the US Attorney’s Office in Manhattan on March 14, 2022, according to the documents. He was questioned “extensively” about his selection of stocks, his use of direct stock purchases instead of swaps and other aspects of his trading strategy in sessions that lasted for about six hours, with two breaks, according to the filing.

“Whatever the origins of its interactions with Mr. Hwang and his counsel, there came a time when they only continued because the Government was not honest with the defense,” Hwang’s lawyers said. “The consequences are that the Government now has unique insight into the defense that it should not.”

Prosecutors claim Hwang and Halligan repeatedly made materially false and misleading statements about Archegos’s portfolio to large investment banks and brokerages, resulting in steep losses on Credit Suisse Group AG, Nomura Holdings Inc. and Morgan Stanley. The fall of Archegos cost banks $10 billion and exposed huge problems in how risk is managed.

Hwang’s lawyers blasted the government’s overall case as an “extraordinary” attempt to criminalize “entirely lawful activity” including swap transactions “that were fully executed according to their negotiated terms,” according to the filing.

“It is clear from the Indictment that in reality it is the securities markets and the rules that have long regulated them that the Government seeks to put on trial,” according to Hwang’s filing, adding: “Trying to fashion a crime where none exists, the indictment relies upon a novel theory of ‘open-market manipulation’ that has been discredited” by the appeals court in Manhattan.

--With assistance from Sridhar Natarajan and Bob Van Voris.

(Updates fifth paragraph to show US Attorney declined to comment)

©2022 Bloomberg L.P.