Brothers plead guilty to insider trading case involving Trump media company

Two brothers pleaded guilty in federal court on Wednesday for their roles in a $22 million insider trading scheme involving the company that took former President Trump's social media company public.

Florida venture capitalist Michael Shvartsman, 53, and his brother, Gerald, 46, each pleaded guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison. U.S. District Judge Lewis Lyman has scheduled the brothers' sentencing hearing for July 17.

The brothers are accused of illegally trading on non-public information In October 2021, Digital World Acquisition Corp (DWAC), a shell company, planned to acquire Trump Media & Technology Group, the parent company of social media network Truth Social. Had made.

According to the Justice Department, the brothers obtained confidential information about the details of the deal, including the timeline for its announcement, and then purchased millions of dollars worth of DWAC securities in the open market before the merger with Trump Media was made public.

U.S. Attorney Damien Williams said in a press release, “Michael and Gerald Shvartsman admitted in court that they received confidential, insider information about the upcoming merger between DWAC and Trump Media and used that information to conduct a profitable, but illegal, Made for open market trading.” Wednesday from the Justice Department.

Williams said, “Insider trading is fraud, plain and simple, and today's sentence should remind anyone who might be tempted to corrupt the integrity of the stock market that this will get them a ticket to jail.”

Shvartsman was arrested last June along with a third man, Bruce Garelick, who worked at Michael Shvartsman's Rocket One Capital venture firm. Garelik, who was placed on DWAC's board of directors, is accused of providing the brothers with key information about an upcoming deal in 2021. Garelick is set to go to trial later this month.

An attorney for Michael Shvartsman declined to comment. Attorneys for Gerald Shvartsman and Bruce Garelick did not immediately respond to requests for comment.

Updated at 5:08 pm.

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