"DSW Stock Tip Case Dropped After Witness Gets Cold Feet"

In a surprising turn in the DSW insider trading case, Boston prosecutors recently dropped charges against Ryan Shapiro, founder of JPay, and his co-defendant Kris Bortnovsky. The case unraveled after David Schottenstein, the key witness and admitted tipper, reversed his decision to testify. Schottenstein’s withdrawal, reportedly advised by his psychologist due to mental health concerns, left the prosecution without sufficient evidence to proceed. According to court filings, Schottenstein cited acute anxiety and trauma as reasons for stepping back, especially given his close friendship with Shapiro.

The prosecution alleged that Schottenstein had received nonpublic information from a friend on the DSW board, which he used to make profitable trades before the company’s 2017 earnings report and other key corporate events. While Schottenstein had initially cooperated by providing evidence, his decision to cease collaboration with the government abruptly shifted the case's trajectory, resulting in the charges being dropped “without prejudice,” leaving the door open for future action if circumstances change.

Eric Rosen, one of Schottenstein’s attorneys and formerly a lead prosecutor in the Varsity Blues college admissions scandal, was involved in the defense. The dismissal marks a complex endpoint to the case, underscoring the challenges prosecutors face when relying on cooperating witnesses with intricate personal histories. For Shapiro, the end of this case signifies a fresh start, with his attorney expressing hope that Shapiro will continue his philanthropic work and professional endeavors. The case's outcome serves as a reminder of the nuanced intersections between mental health and legal proceedings.