- Two brothers were accused of insider trading ahead of Trump Media’s IPO.
- Michael and Gerald Shvartsman each pleaded guilty to one count of securities fraud.
- The brothers pocketed $22 million in the scheme, according to prosecutors.
Two brothers accused of engaging in insider trading ahead of the public offering of former President Donald Trump’s Truth social media platform pleaded guilty Wednesday to one count of securities fraud each.
Michael and Gerald Shvartsman, of Florida, were charged with engaging in illegal transactions based on non-public knowledge that Digital World Acquisition Corp – a SPAC – was going to acquire Trump Media & Technology Group to take it public, according to the filing. ‘charge. Trump Media is the parent company of Truth Social.
“Michael and Gerald Shvartsman admitted in court that they received confidential and privileged information about an upcoming merger between DWAC and Trump Media and that they used that information to make profitable, but illegal, transactions on the open market ” U.S. Attorney Damian Williams said in a statement.
The brothers were first arrested last June. One count of securities fraud carries a maximum prison sentence of 20 years, according to the U.S. Attorney’s Office for the Southern District of New York. The two brothers are expected to be sentenced in July.
They pocketed more than $22 million from the scheme, authorities say, and Michael used $14 million to buy a yacht he named the Provocateur, the New York Times reports.
A third man, Bruce Garelick, was also charged and is expected to stand trial later this month, according to the Times. Garelick’s lawyers did not immediately respond to a request for comment from Business Insider.
The indictment does not allege that Trump was involved in the scheme.
“Insider trading is cheating, pure and simple, and today’s sentences should serve as a reminder to anyone who might be tempted to corrupt the integrity of the stock market that doing so will earn them a prison sentence,” he said. press release from Williams.
Elsewhere in Truth Social News, parent company Trump Media is suing its co-founders for damaging the company and trying to thwart the DWAC merger.
Shares of Trump Media fell Monday after it reported a net loss of $58 million last year and revenue of $4.1 million, sending the former president’s net worth plummeting. more than a billion dollars.
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