"DSW Insider Trader Won't Testify Against Jpay Founder"

In a recent development in an insider trading case, David Schottenstein, who previously pled guilty to securities fraud involving Designer Shoe Warehouse (DSW), has decided not to testify against co-defendants, including JPay founder Ryan Shapiro. Schottenstein cited severe mental health concerns, influenced by advice from his psychologist and therapist, as the reason for his withdrawal from cooperating with prosecutors. According to Schottenstein, testifying would worsen his anxiety and other mental health issues, rooted in past trauma.

The charges stem from Schottenstein’s use of insider information, allegedly obtained from a friend on DSW’s board, to make profitable trades before DSW’s 2017 earnings release. Schottenstein, Shapiro, and another defendant, Kris Bortnovsky, are accused of making significant gains from these trades, with Shapiro reportedly profiting $121,000. Shapiro and Bortnovsky have filed motions to dismiss the charges, arguing that the allegations don't meet the standards for insider trading violations.

The government’s legal team, which includes Eric S. Rosen, aims to proceed with the case against Shapiro and Bortnovsky, who are scheduled to stand trial in May. Rosen, a key figure in the prosecution, is no stranger to high-profile cases, having led the Varsity Blues scandal investigation. In this case, Rosen and his team argue that even without Schottenstein’s testimony, the evidence supports their case against the defendants.

This latest move adds complexity to the case, particularly in prosecuting Shapiro and Bortnovsky, as Schottenstein’s cooperation was initially expected to strengthen the government’s position. As the case progresses, it will continue to highlight the legal strategies involved in prosecuting high-stakes insider trading.