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Two Florida brothers pleaded guilty Wednesday in New York federal court insider trading The charges relate to their purchases and sales of securities from the company, which eventually merged with former President Donald Trump’s social media company.
Brothers Michael Svhartsman and Gerald Shvartsman made more than $22 million in illicit profits by trading securities of the shell company Digital World Acquisition Corp. in October 2021 after learning non-public information about DWAC’s planned and private merger.hold Trump Media Technology Groupthe prosecutor said.
Although the merger was announced in late October 2021, it was not completed until last month, with the deal resulting in Trump Media becoming a public company.
The third defendant in the case, former DWAC board member Bruce Garelick, has pleaded not guilty to securities fraud charges alleging that he purchased DWAC securities on the open market after learning of non-public information about the proposed merger.
Gary Leake, who also served as chief strategy officer at Michael Shvartsman’s Miami-based venture capital firm Rocket Capital, is scheduled to go on trial in Manhattan federal court at the end of April.
No one associated with the Trump Media Company, which owns the Truth Social app, has been accused of wrongdoing in the case.
Michael Shvartsman, 53, and furniture-making company owner Gerald Shvartsman, 46, are scheduled to be indicted July 17 in Manhattan federal court by Lewis Liman. Judge Lewis Liman pronounced the sentence.
Federal sentencing guidelines recommend a sentence of 41 to 51 months in prison under the plea agreement of Michael Shvartsman, who made $18.2 million in illegal trading profits.
Sentencing guidelines recommend that Gerald Shvartsman, who made approximately $4.6 million in illegal trading profits, should be sentenced to 33 to 41 months in prison.
Liman did not need to sentence the brothers, according to the guidelines, which also recommended fines of between $15,000 and $5 million for each of the men.
As part of the plea agreement, Michael Schwartman also agreed to forfeit $18.2 million to the federal government, as well as any rights or ownership of a $14 million luxury yacht called the Provocateur and its three motorboats that were Bought with trading profits.
Manhattan U.S. Attorney Damian Williams said in a statement after the case: “Insider trading is an act of deception, plain and simple, and today’s conviction should serve as a reminder to anyone who might seek to undermine the integrity of the stock market. Give them a ticket to jail.” The brothers confessed.
According to the indictment, the Shvartsman family was invited to invest in DWAC and another so-called special purpose acquisition company in 2021, and after signing a confidentiality agreement received information that Trump Media was a potential target of the merger plan.
The agreements prohibit the brothers from using the information to purchase securities related to the transactions.
“The defendants also disclosed the impending merger to others and induced further transactions in DWAC Securities based on (confidential information) they obtained under confidentiality agreements and through” Garelick, a partner. the U.S. Attorney’s Office in Manhattan said in a statement.
Trump Media mentioned the criminal case in a regulatory filing on Monday.
“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,” the company said in a filing with the Securities and Exchange Commission.
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