BOSTON – Two Florida men were indicted today in connection with their alleged roles in a multi-million-dollar insider trading scheme.
Kris Bortnovsky, a/k/a “Kris Bort,” 40, of Surfside, Fla., and Ryan Shapiro, 44, of Bay Harbor Island, Fla., were charged with one count of conspiracy to commit securities fraud and one count of securities fraud. Both defendants were previously charged by criminal complaint on Dec. 6, 2021. A third defendant, David Schottenstein, 38, also of Surfside, Fla., was charged separately by an Information with conspiracy to commit securities fraud and has agreed to plead guilty.
As alleged in the charging documents, Bortnovsky served as a financial services professional for more than 20 years and Shapiro was an entrepreneur and founder of two privately held companies. From at least August 2017 to at least May 2019, it is alleged that Bortnovsky and Shapiro conspired to trade in the stocks of certain publicly traded companies, including At Home Group, Inc., Aphria, Inc., DSW, Inc. and Rite Aid Corp., among others, based on material nonpublic information (MNPI) regarding the earnings results and merger-and-acquisition activity of those companies. In many instances, Bortnovsky and Shapiro allegedly obtained the information from Schottenstein, who was a relative of one or more directors of these companies or of companies involved in proposed acquisitions of them. In another instance, Bortnovsky obtained the MNPI and shared it with Shapiro and Schottenstein.
The charge of securities fraud conspiracy provides for a sentence of up to 25 years in prison, five years supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of securities fraud provides for a sentence of up to 20 years in prison, three years supervised release and a fine of $5 million. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Acting United States Attorney Nathaniel R. Mendell and Wayne A. Jacobs, Special Agent in Charge of the Federal Bureau of Investigation’s Criminal/Cyber Division, Washington Field Office, made the announcement today. The Securities & Exchange Commission and the Federal Bureau of Investigation, Miami Field Office, provided valuable assistance. Assistant U.S. Attorneys Stephen E. Frank and Seth B. Kosto – Chief and Deputy Chief, respectively, of Mendell’s Securities, Financial & Cyber Fraud Unit – are prosecuting the case.
The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
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