Columbus native David Schottenstein pleaded guilty Feb. 1 to a conspiracy to commit securities fraud charge during a meeting with Judge Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts.
Schottenstein, now a Florida resident, also waived his right to an appeal to the charge, which carries a maximum sentence of 25 years in prison.
Prosecutors have recommended the low end of the sentencing guidelines, due to Schottenstein having no prior criminal record and agreeing to plead guilty and waive his right to appeal. They recommended to the judge one year of supervised release, forfeiture of the $634,893 he gained from the stock trades, plus additional restitution in an amount to be determined by the court at sentencing and a special assessment of $100 to be paid on the date of sentencing. However, Woodlock noted during the hearing that he is not bound by this agreement.
Sentencing is scheduled to take place in June. Schottenstein was released on $10,000 bail pending the sentencing.
Schottenstein’s guilty plea stemmed from actions he took to financially benefit from insider tips he received ahead of three corporate announcements. Schottenstein received tips from a cousin before an August 2017 earnings announcement of Columbus-based DSW Inc., according to Department of Justice and Securities and Exchange Commission court filings.
He also received tips before the February 2018 announcement of a merger between Rite Aid Corp. and Albertsons Cos. and a December 2018 announcement of the acquisition of Aphria Inc. and Green Growth Brands, Inc., according to court filings.
His cousin, who is not named in the filings, had, according to those documents, obtained this information in his role as a member of DSW’s board of directors since 2012 and as a member of Green Growth Brands’ board from February to November 2018. Schottenstein’s cousin also obtained information about Albertsons due in part to a family-owned company that was a party to the deal, the court filings said.