Founder of designer 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 designer eyewear company whose family has held investments and leadership roles at retailers like DSW Inc has agreed to plead guilty to insider trading with two other men, according to court documents.

Federal prosecutors in Boston revealed in court documents Thursday that David Schottenstein has agreed to plead guilty to conspiring to commit securities fraud and to cooperate in the lawsuits of a hedge fund manager and entrepreneur.

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

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Prosecutors and regulators said he had traded more than $ 600,000 on information gleaned from a relative who served on the board of directors of shoe retailer DSW, now known as Designer Brands Inc (DBI. N), and cannabis company Green Growth Brands.

Court documents did not name the parent, but his description matches that of Joey Schottenstein, the first cousin of the accused whose father is Jay Schottenstein, executive chairman of Designer Brands and CEO of American Eagle Outfitters Inc ( AEO.N).

A spokesperson for Joey and Jay Schottenstein said they were “shocked and saddened” to learn of the illegal conduct and the violation of their confidences.

David Schottenstein, 38, negotiated ahead of the DSW results announcement in 2017; a 2018 merger agreement between Albertsons (ACI.N) and Rite Aid Corp; and a 2018 GGB bid for Aphria Inc, which failed, prosecutors said.

A family business Schottenstein belonged to an investment consortium under the Rite Aid deal, which subsequently failed.

Prosecutors said David 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 this advice, the United States Securities and Exchange Commission in a related lawsuit said Bortnovsky and his fund 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”.

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

Our Standards: Thomson Reuters Trust Principles.


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