Founder of U.S. sunglasses company pleads guilty to insider trading

A general view of the John Joseph Moakley courthouse in Boston, Massachusetts, United States on July 27, 2021. REUTERS / Nicholas Pfosi

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BOSTON, Jan.6 (Reuters) – The founder of a branded eyewear company whose family has held investment and leadership positions at many large retailers like DSW Inc has agreed to plead guilty to committing a misdemeanor insider with two Florida men using information he learned from a cousin.

Boston federal prosecutors revealed in court documents on Thursday that David Schottenstein had agreed to plead guilty to conspire to commit securities fraud and to cooperate in the prosecution of a venture capitalist and entrepreneur.

Schottenstein, who founded designer sunglasses company Privè Revaux, in a statement provided by defense lawyer Eric Rosen, said he took “full and sole responsibility for my conduct and deeply regrets my actions. actions “.

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Prosecutors said Schottenstein, 38, exchanged information he learned from a cousin who served on the boards of shoe retailer DSW and cannabis company Green Growth Brands.

Schottenstein negotiated ahead of the DSW results announcement in 2017; the 2018 news that Albertsons Companies (ACI.N) and Rite Aid Corp had agreed to merge; and a failed 2018 GGB takeover bid for Aphria Inc, prosecutors said.

The cousin’s family business was part of an investment consortium involved in the Rite Aid deal, which subsequently failed.

Schottenstein won more than $ 600,000, the United States Securities and Exchange Commission said in a related lawsuit.

Prosecutors said Schottenstein also informed two friends – Kris Bortnovsky, co-founder of Sakal Capital Management, and Ryan Shapiro, who founded inmate money transfer service provider JPay – of the expected news.

Using that advice, the SEC and prosecutors said Bortnovsky made over $ 4 million and Shapiro raised $ 121,000. They were originally indicted last month and formally charged on Thursday.

James Froccaro, Bortnovsky’s lawyer, said he was innocent. Martin Weinberg, Shapiro’s lawyer, said he “is factually and legally innocent”.

DSW is now called Designer Brands Inc (DBI.N). Its executive chairman is Schottenstein’s uncle Jay Schottenstein, who is also CEO of American Eagle OutfittersInc (AEO.N). Neither company responded to requests for comment.

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Reporting by Nate Raymond in Boston; Editing by Bill Berkrot and Cynthia Osterman

Our standards: Thomson Reuters Trust Principles.

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