Arrest of Hedge Fund Manager in Insider Trading Case
A former hedge fund manager based in Miami, Kris Bortnovsky, was arrested on Friday. This followed federal prosecutors in Boston reviving an insider trading case that had seen a pause in 2022 when prosecutors previously withdrew an agreement to testify against him.
Bortnovsky, who co-founded Sakal Capital Management, allegedly profited over $4 million through illegal transactions. These were based on tips from acquaintances linked to well-known retailers, notably the parent company of DSW.
One significant connection in this case is Florida entrepreneur David Schottenstein. He was sentenced to a year in prison in 2023 for his part in the insider trading scheme, which initially triggered allegations against Bortnovsky and another individual.
Schottenstein had intended to provide testimony against them but later opted to cooperate with authorities, leading to federal prosecutors dropping the case against Bortnovsky and others in December 2022.
Now, prosecutors are indicating that the investigation is still active, announcing that three other individuals have recently pleaded guilty related to their involvement.
In the latest charges, Bortnovsky allegedly intimidated Schottenstein, who also faced charges for both securities fraud and obstructing justice. In March 2022, he was implicated in a case described as “CC-1.”
The indictment claims that Bortnovsky followed Schottenstein and stared him down while wearing dark sunglasses, aiming to influence his testimony.
As of now, both Bortnovsky’s and Schottenstein’s legal representatives have not replied to requests for comments regarding the case.
Details of the Allegations
Between 2017 and 2019, Bortnovsky is accused of conspiring with others, including Schottenstein, to trade on private insights about revenue and mergers involving companies like DSW (now referred to as Designer Brands), Aphria Inc., and others.
Schottenstein allegedly shared sensitive information gleaned from DSW, impacting a failed merger with his family business and the cannabis company, Green Growth Brand.
Additionally, the indictment mentions that Bortnovsky traded securities in home décor retail during that period, based on information about potential acquisitions relayed to him from other sources.
