US Drops $300 Million Fraud Case That Spotlighted Brian Kahn

US prosecutors dropped a $300 million fraud indictment against a former executive at Prophecy Asset Management accused of working with Brian Kahn, the disgraced founder of Franchise Group Inc., to cheat investors in their hedge fund.

Prosecutors offered no explanation Friday in asking a judge to dismiss the case against Jeffrey Spotts, who had faced a July 6 trial in federal court in Trenton, New Jersey. Both Kahn and another former Prophecy executive, John Hughes, pleaded guilty and were expected to testify against Spotts.

But the case foundered this year when prosecutors said evidence involving Kahn included classified information ...