A Florida venture capitalist and his brother prepared to plead guilty in a lawsuit Monday. insider trading The merger is tied to a merger that took Donald Trump’s social media company public last week.
Venture capitalist Michael Shvartsman and his brother Gerald Shvartsman have both previously pleaded not guilty to insider trading and criminal conspiracy charges related to the deal and merger shares in shell companies. Trump Media last week.
A new court filing Monday showed the brothers’ plea change hearings will be held Wednesday afternoon in U.S. District Court in Manhattan. Changes to a plea hearing usually involve the defendant pleading guilty.
Also on Monday, New York defense attorney Alan Futerfas filed a notice with the court saying he had joined Michael Shvartsman’s legal team.
Futerfas has represented Donald Trump, Trump’s adult children and his company, the Trump Organization, in various legal matters in the past.
In a brief phone call with CNBC on Monday, Furtfas said he could not discuss the case, whether Schwarzman would plead guilty or why he was hired to represent him.
Earlier this year, the Florida-based venture capital investor was charged with money laundering in addition to the securities fraud charges he already faced.
Trump Media and Technology Group mentioned the case in a securities filing on Monday. The newly public company told regulators: “These individuals have no connection to TMTG and it is understood and believed that TMTG is not the target of any DOJ (Department of Justice) enforcement action.”
Gerald Shvartman’s attorney, Roland Riopelle, also declined to comment on his client, who owns a furniture-making company in Florida.
A spokesman for the U.S. Attorney’s Office in Manhattan, which is prosecuting the Schwartzmans and a third man, Bruce Garelick, did not immediately respond to a request for comment.
Like the brothers, Garlick has pleaded not guilty. His plea hearing schedule had not changed as of Monday evening.
All three are scheduled to stand trial on April 29. If the Schwartzmans plead guilty but Garelick does not change his plea, he is still expected to stand trial on that date.
CNBC has reached out to Garelick’s attorney for comment.
Furtfas made a surprise appearance at a newly scheduled plea hearing, a week after Judge Lewis Liman denied Michael Schwarzman’s request to move Michael Schwarzman’s money laundering trial from federal court in Manhattan to federal court in South Florida. .
Six days ago, Trump Media Company completed its merger with Digital World Acquisition Corp, a special purpose acquisition company, and began trading on the Nasdaq stock market under the stock code DJT.
Shvartsmans and Garelick were indicted last June on securities fraud and conspiracy charges.
They are accused of buying DWAC stock based on non-public information that the shell company was considering a merger with Trump’s social media company, Trump Media and Technology Group, which owns the Truth Social app.
Michael Shvartsman is CEO of Rocket One Capital LLC in Miami, where Garelick is the former chief strategist.
In 2021, while working for Shvartsman, Garelick also served on the board of directors of DWAC, a then-little-known shell company. When Garlick learned of merger talks between DWAC and Trump Media, prosecutors say he shared the information with Schwarzman, who in turn shared the information with his brother, Gerald.
Over the next few months, the trio made multiple purchases of DWAC stock.
When DWAC announced plans to merge with Trump Media in October, the company’s stock price soared from around $10 per share to closing at $94 per share on October 24, 2021.
After the merger announcement, the Garlick and Schwarzman families allegedly sold their newly valuable stock for a net profit of $22 million, according to prosecutors.
In February, Michael Shvartsman was charged in a superseding indictment that added money laundering charges to the original charges against him and two others.
The new charges and those of engaging in monetary transactions in property stem from specific unlawful activity charges he and two other men already face.
It also adds a count related to two money transfers Shvartsman allegedly made using his share of profits from DWAC stock sales.
In December 2021, he allegedly transferred approximately $8.4 million in proceeds from securities sales to a bank account controlled by a business associate. Prosecutors said the move “provided an effective way to hide the source and ownership of these funds.”
The next summer, Schwarzman allegedly transferred an additional $12 million to a bank account he controlled, according to the indictment, noting that he used the money to purchase a $14.7 million luxury yacht.
Schwarzman also allegedly took steps to hide the source of the funds. This included the use of “corporate forms, multiple bank transfers and legal agreements to conceal the source of funds to purchase the yacht, as well as the ownership and control of the yacht after the purchase,” according to the indictment.
Prosecutors are seeking to seize bank accounts, the yacht and three Yamaha jet skis.
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