Insider Trader Denied Live Testimony at Sentencing Hearing

Massachusetts federal prosecutors have objected to insider trader David Schottenstein's request to call five character witnesses at his sentencing. ​ Schottenstein, who admitted to tipping off others about Designer Shoe Warehouse stock, sought to have his wife, childhood caregiver, a friend, a former neighbor, and a longtime acquaintance testify on his behalf. ​ His attorneys argued that these witnesses could provide unique insights into his character, with each person speaking for only three to five minutes. ​

Prosecutors, however, contended that the usual practice of submitting a sentencing memorandum with supporting letters should suffice. ​ They argued that allowing live testimony would create an imbalance, as there are no identifiable victims to testify against Schottenstein, despite the crime not being victimless. ​ They also highlighted that Schottenstein had previously agreed to testify against co-defendants Ryan Shapiro and Kris Bortnovsky but later withdrew, citing mental health concerns. ​ This withdrawal, according to the government, undermined their prosecution efforts and wasted resources. ​

Schottenstein's legal team responded by stating that his withdrawal was based on mental health professionals' advice and occurred months before the trial. ​ They criticized the government for reversing its stance and blaming Schottenstein for the case's dismissal against Shapiro and Bortnovsky, which they found disappointing. ​

The case, USA v. Schottenstein, is being heard in the U.S. District Court for the District of Massachusetts. ​ Schottenstein is represented by Dynamis LLP partner Eric Rosen and attorneys from Freedman Normand Friedland LLP, while the government is represented by Seth B. Kosto and Stephen E. Frank from the U.S. Attorney's Office for the District of Massachusetts. ​ The court's decision on whether to allow the character witnesses at the sentencing hearing remains pending.

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