Two brothers plead guilty to insider trading charges related to taking Trump Media public

Two Florida brothers pleaded guilty Wednesday to insider trading charges, admitting to illegally earning more than $22 million before the 2021 public announcement that an acquisition company was taking Florida’s media company public former President Donald Trump.

Michael and Gerald Shvartsman entered pleas to a single count of securities fraud in Manhattan federal court, where Judge Lewis J. Liman set sentencing for July 17.

The men said they knew they were committing a crime when they made trades in October 2021 through a New York broker, buying stock in Digital World Acquisition Corp., a so-called blank checks designed to take another company public without an IPO. The two men had been informed that Digital World was considering merging with Trump Media & Technology, whose main asset is the social network Truth Social.

In October 2021, Digital World shares soared more than 800% after the deal with Trump Media was announced.

The indictment against the brothers in no way implicates Trump – who is running for president again this year – or Trump Media & Technology Group, which last week began trading on the Nasdaq stock market and is Currently is worth around $6.7 billion. Trump owns about 57% of the company.

“I made a terrible mistake,” Gerald Shvartsman told the judge as he pleaded guilty. He added that it was “a mistake and I will pay dearly for this mistake for the rest of my life.”

His brother told the judge he knew his securities trades were wrong and illegal.

According to the indictment, the men invested millions of dollars in Digital World, then sold the securities for $22 million in profits after news of Trump Media’s activities became public.

Share secrets with friends

At the time, Michael Shvartsman owned Rocket One Capital LLC, a venture capital firm, according to court documents.

According to court documents, the men shared their secrets with friends and employees, who also purchased tens of thousands of titles before the merger with Trump Media & Technology Group was announced.

The merger and IPO of Trump Media & Technology Group was highly anticipated by Trump’s political supporters, who viewed the Truth Social platform as a valid response to Trump’s temporary expulsion from certain social media platforms following the insurrection of January 6, 2021 in the United States. Capitol.

Michael Shvartsman, 53, of Sunny Isles Beach, Fla., and his brother Gerald Shvartsman, 46, of Aventura, Fla., remain free on bond while awaiting sentencing. They were both arrested last June.

Federal sentencing guidelines in the plea letters signed by the men recommended that Michael Shvartsman be sentenced to about four years in prison and that his brother spend at least three years behind bars. The agreements also call for Michael Schvartsman to forfeit $18.2 million in profits and his brother to forfeit $4.6 million.

In a statement, U.S. Attorney Damian Williams said: “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 be worth a prison sentence.”