Two brothers pleaded guilty on Wednesday to insider trading in securities in the company that ultimately took former President Donald Trump’s media business public.
According to federal prosecutors in New York, Michael Shvartsman, 53, and Gerald Shvartsman, 46, made millions by trading in shares of Digital World Acquisition Corporation before it merged with Trump Media. Michael Shvartsman, head of Miami-based venture capital firm Rocket One Capital, and Gerald Shvartsman, 46, each pleaded guilty to one count of securities fraud before U.S. District Judge Lewis Liman in Manhattan. Rocket One’s chief investment officer, Bruce Garelick, is scheduled to face trial on related charges on April 29.
Reuters reports that prosecutors charged the trio last year with illegally trading on inside information about Trump Media & Technology Group’s (TMTG) plan to go public through a merger with a blank-check company. TMTG operates Truth Social, Trump’s main social media platform. It is alleged that the trio signed confidentiality agreements in June 2021, when they were approached to become early investors in Digital World Acquisition, the blank-check company, which required them to keep information they learned confidential and not trade the company’s securities in the open market. Prosecutors say that after hearing the company was in merger talks with TMTG, the trio tipped others and bought Digital World securities, selling them after the deal was announced on Oct. 20, 2021, to make a total of $22 million in illegal profit.
Per ABC News, each of the men face up to 20 years in prison when they’re sentenced in July, but prosecutors have agreed to recommend a sentence of about three years. There was no evidence that former President Trump was aware of the brothers’ conduct, and he was not part of the case.
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