An ex-Jefferies Financial Group Inc. hedge fund manager charged with defrauding his former employer can sue the firm to cover his legal defense costs, a New York appellate court ruled.

Jordan Chirico won a Tuesday ruling that reversed a lower-court judge’s dismissal of his suit seeking advancement of legal fees under his employment agreement with Jefferies’ Leucadia Asset Management and other contracts tied to his management of its 352 Capital fund.

Chirico was indicted last year by federal prosecutors on charges that he knowingly invested more than $100 million of the fund’s money into an alleged Ponzi scheme involving water vending machines. He has pleaded not guilty to the charges. He was sued by the Jefferies fund in 2024 over similar allegations.

The ruling could set up Jefferies to pay millions of dollars in legal fees on Chirico’s behalf. JPMorgan Chase & Co. has paid $115 million in legal fees for Charlie Javice and a co-defendant who were convicted of defrauding the bank in its $175 million of her student-finance startup. Lawyers for Chirico didn’t immediately return messages seeking comment on Tuesday’s ruling. Jefferies declined to comment.

The lower-court judge who dismissed Chirico’s claims for legal fees in April 2025 found that his contracts with Jefferies didn’t cover him as a former employee who was fired in June 2024 and that his legal troubles also fell under an exception for internal disputes.

But the appellate panel said there was language in one of Chirico’s agreements that appeared to state that a former employee could be covered. The judges also said Chirico had adequately alleged that the federal criminal case, which involves dozens of other defendants not connected to Jefferies, was not an internal dispute.

The case will now return to the lower court for further proceedings. It’s unclear whether Jefferies will be required to advance Chirico’s fees before the case is resolved.

The total amount of Chirico’s legal fees to date couldn’t be learned on Tuesday. But when he first sued for advancement in December 2024, he said he had already incurred $500,000 in fees and expenses responding to an investigation by the Manhattan US attorney’s office as well as $100,000 to defend against Jefferies’ lawsuit.

Chirico is currently being represented by at least three law firms led by prominent white-collar defense firm Hecker Fink, according to court records.

The charges against Chirico are part of a large case related to the collapse of WaterStation Management, a company which said it operated and franchised filtered water vending machines. Many of the machines didn’t exist or were pledged to multiple investors, according to court papers.

Lawyers representing WaterStation creditors said in a 2025 filing that the business raised about $400 million from thousands of investors, many of whom lost all or part of their savings.

According to both prosecutors and Jefferies, Chirico directed 352 Capital to purchase bonds issued by WaterStation. They claim he knew WaterStation machines didn’t exist but put the fund’s money into the business anyway in part to recoup his personal investment.

Chirico has said he too was a victim of WaterStation and that his investment decisions were subject to review and authorization by Leucadia executives.

WaterStation founder Ryan Wear was also charged and has pleaded not guilty. Both he and Chirico are scheduled to go on trial next year in Manhattan federal court.