US (FL): Two medical cannabis company shareholders charged with fraud

Two shareholders of Aphria, a medical cannabis company, have been arrested in connection with their roles in an alleged insider trading scheme that generated at least $4 million in profits. Kris Bortnovsky and Ryan Shapiro were charged with one count each of conspiracy to commit securities fraud. The defendants will make an initial appearance in federal court in the Southern District of Florida and will appear in Boston at a later date.

As alleged in the charging document, from at least August 2017 to November 2021, Bortnovsky, a financial services professional for more than 20 years, and Shapiro, an entrepreneur and founder of two privately held companies, conspired to trade in the stocks of certain publicly traded companies, including At Home Group, Aphria, DSW, and Rite Aid, among others, based on material nonpublic information regarding the earnings results and merger-and-acquisition activity of those companies. In many instances, Bortnovsky and Shapiro allegedly obtained the information from a co-conspirator who was a relative of one or more officers or directors of these companies, or of companies involved in proposed acquisitions of the companies. In other instances, Bortnovsky shared MNPI that he had obtained with Shapiro and their co-conspirator. 

The charging statute provides for a sentence of up to five years in prison, three years of supervised release, and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

For more information:
The United States Attorney's Office District of Massachusetts
www.justice.gov/usao-ma


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