On Wednesday, venture capitalists Michael and Gerald Shvartsman, who are from Florida, entered a guilty plea for their roles in an insider trading conspiracy connected to the historic transaction that made former President Donald Trump’s social media company public.
According to federal prosecutors, the brothers entered guilty pleas to one count of securities fraud in New York, which carries a potential sentence of 20 years in prison. The two brothers were detained in June and accused of engaging in illicit trading based on information not widely known about a shell firm’s covert acquisition of Trump Media & Technology Group, the parent company of the faltering social network Truth Social.
Damian Williams, the US Attorney for the Southern District of New York, said in a statement that Michael and Gerald Shvartsman “admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades.”
According to the indictment, the brothers and a third party, Bruce Garelick, made about $22 million in total in October 2021 from trading on their insider information of the transaction.
After the blank-check business made public its agreement to merge with Trump Media, shares of the shell company, Digital World Acquisition Corporation, surged.
“Insider trading is cheating, pure and simple,” Williams declared, adding that those who would be inclined to compromise the integrity.
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