Two investors in Trump Media insider trading scheme plead guilty

Ariana Baio
·2 min read

Two investors connected to an insider trading scheme regarding the merger of Digital World Acquisition Corporation (DWAC) with Trump Media & Technology Group have pled guilty to securities fraud in connection to the scheme.

On Wednesday, brothers Michael Shvartsman and Gerald Shvartsman each pled guilty to one count of securities fraud in New York City.

Their guilty pleas come approximately 10 months after they were arrested and charged with trading in securities of DWAC based on material, non-public information about the merger between DWAC and Trump Media – a media company founded by former president Donald Trump.

Prosecutors say both men made more than $22 million in illegal profits.

Initially, the two brothers pled not guilty to the securities fraud charges and were expected to head to trial later this month but changed their minds.

Gerald Shvartsman walks following a hearing at the Manhattan Federal Court, in New York City, U.S. July 20, 2023. (REUTERS)
Gerald Shvartsman walks following a hearing at the Manhattan Federal Court, in New York City, U.S. July 20, 2023. (REUTERS)

According to federal prosecutors, both men were invited to invest in DWAC and another special purpose acquisition company and then, after signing non-disclosure agreements, were provided confidential information about the shell company.

As a condition of the non-disclosure agreement, they were prohibited from using the confidential information to buy or sell securities on the open market.

After making initial investments into DWAC through the initial public offering process, a third individual who is also indicted and set to go to trial, Bruce Garelick, was given a seat on the board of directors and provided the brothers with valuable non-public information about the planned merger.

Prosecutors say Michael and Gerald Shvartsman bought millions of dollars of DWAC Securities before news of the merger was made public and passed along information to friends, neighbours and employees.

After DWAC’s merger with Trump Media was made public in October 2021, the stock and warrant holdings significantly increased in value. The defendants and the individuals they tipped then sold their DWAC securities for a significant profit.

No other person, including anyone from Trump Media, was charged with wrongdoing other than Mr Garelick and Michael and Gerald Shvartsman

“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,” US Attorney Damien Williams said in a press release.

“Insider trading is cheating, plain and simple, and today’s convictions should remind anyone who may be tempted to corrupt the integrity of the stock market that it will earn them a ticket to prison.”

Both men are scheduled to be sentenced on 17 July.

Each charge carries a maximum sentencing of 20 years in prison, though they will likely receive much shorter sentences in exchange for their guilty pleas.

  • Up next
  • Up next
  • Up next
  • Up next

Latest Stories

  • Woman acquitted of historical sex offence against teen stepson

    WARNING: This story contains details of child sexual abuse.An Ontario woman has been acquitted of a sex crime against her teen stepson in Ottawa 40 years ago because the judge couldn't be sure that Canadians in the 1980s would have found it criminally immoral.It's a rare case because a woman stands accused, leaving the judge in a tough spot with little case law to lean on, according to a law professor who specializes in sexual offences. Still, Janine Benedet said it would have been helpful for t

  • Calgary contractor guilty of forgery tells judge he 'screwed up'

    A Calgary contractor who did work on the HGTV show Property Brothers apologized in court and told a judge he "screwed up" as he pleaded guilty to charges of forgery. Last summer, Alan Hrehirchuk, 54, was charged with fraud and forgery. On Monday, the fraud charges were withdrawn after the contractor pleaded guilty to forgery for issuing fake subcontractor invoices to a couple who had hired Hrehirchuk's company to do a major renovation on their home.After hearing arguments from prosecutor Greg Wh

  • Murder trial underway for son accused of dismembering mother

    WARNING: This story contains graphic and disturbing details of violence.The trial of a Toronto man who is accused of brutally stabbing his mother to death in their Leslieville condo and dismembering her body in March 2022 got underway this week.On Monday, assistant Crown attorney Jay Spare told a Toronto jury that Dallas Ly stabbed his mother Tien Ly 27 times in their condo on Carlaw Avenue, before dismembering her body and carrying it in a shopping cart to Eastern Avenue, where Ly left her rema

  • Infant, grandparents among 4 killed in Highway 401 crash

    Two grandparents and their infant grandchild were among four people killed in a fiery crash east of Toronto on Monday after police pursued a liquor store robbery suspect driving the wrong way on Highway 401, Ontario's police watchdog says. Monica Hudon, spokesperson for the Special Investigations Unit (SIU), said the robbery suspect was also killed in the collision, which involved at least six vehicles. All four people were pronounced dead at the scene on Highway 401 in Whitby, about 50 kilometr

  • Woman shot with 97 pieces of birdshot by neighbor while standing in her own yard

    A Pasco County woman said more than a year after she was shot by her neighbor while standing on her own property, she’s waiting for restitution and justice. Jessica Orlando was hit with dozens of pieces of birdshot after her neighbor shot her with a shotgun. The suspect claims he was shooting at her dogs.

  • A 17-year-old girl was fatally shot while walking home in Long Beach. Police release video of a suspect

    The Long Beach Police Department wants the public's help in identifying a man suspected of shooting and killing a 17-year-old girl last month.

  • Ark. Teacher Accused of Sexually Abusing 15-Year-Old, Sending Him Nude Photos on 'Daily Basis'

    Reagan Gray, 26, is facing one count of sexual assault

  • Sword-wielding man attacks passersby in London, killing a 13-year-old boy and injuring 4 others

    LONDON (AP) — A man wielding a sword attacked members of the public and police officers in a east London suburb early Tuesday, killing a 13-year-old boy and injuring four others, authorities said. A 36-year-old man was arrested in a residential area near Hainault underground station, police said. The incident is not being treated as terror-related or a “targeted attack.” Two police officers were in hospital being treated for stab wounds. Two other people were also injured. Chief Supt. Stuart Bel

  • Trucker was watching Netflix in crash that killed grandparents, cops say. He’s charged

    The Iowa couple were in Minnesota visiting family, according to an obituary.

  • Niagara developer and his company fined $150K after selling new homes illegally: HCRA

    Ontario's homebuilders and vendors regulator has fined a Niagara man and his development company $150,286 after they were found guilty of selling new homes illegally.The Home Construction Regulatory Authority (HCRA) previously provided documents to CBC outlining the 26 charges against Christopher Lamb and Novel Condominiums.The documents state Novel Condominiums entered into 26 agreements of purchase and sale for homes at 6591 Montrose Rd. before becoming registered as a vendor under the Ontario

  • Women killed man who took bag from their car near Wynwood, police say. They’re jailed

    Fredericka Sherice Pickett-Wilson, 29, and Antwoinse Lachaveia Clark, 36, are facing second-degree murder charges.

  • Man stabs police officer from behind in Jerusalem’s Old City

    Israeli police released footage on Tuesday showing a man stabbing a police officer from behind in Jerusalem’s Old City. Two police officers were seen struggling to subdue the suspected attacker, dragging and pulling him to the ground.

  • Family of Black teen shot in head after ringing doorbell of wrong home sues gunman and HOA

    The family of the Black teenager who was shot in the head after ringing the doorbell of the wrong home in Kansas City, Missouri, last year, filed a lawsuit Monday against the White man who shot him and the residential homeowners association where the house is located.

  • Judge Rules On Trump’s Alleged Gag Order Violations In Hush Money Trial

    Judge Juan Merchan warned the former president could face jail time if he continues to violate the directive.

  • $9.5M sexual abuse class-action lawsuit against Stampede moves forward with 300 claimants

    About 300 people have joined a $9.5-million class action lawsuit against the Calgary Stampede, which admitted negligence after a serial sexual abuser worked for decades with teenage performers from the Young Canadians, a judge heard Tuesday. Lawyers for the claimants and Stampede were in court Tuesday to update Court of King's Bench Justice Paul Jeffrey on how the funds will be distributed and to work out details of a plan to notify all potential class members of an upcoming settlement approval

  • ‘Disorderly’ Yellowstone tourist arrested after run-in with bison

    The visitor from Idaho was charged with being under the influence of alcohol, disorderly conduct, and approaching and disturbing wildlife.

  • 2 Dividend Stocks to Double up on Right Now

    These two dividend stocks don't just offer a nice dividend, but huge growth. With one potentially being a major winner in 2024. The post 2 Dividend Stocks to Double up on Right Now appeared first on The Motley Fool Canada.

  • Toronto police lay 102 charges in credit fraud investigation

    Toronto police say they have laid 102 charges in a major synthetic identity fraud investigation involving 12 people.Investigators announced the results of Project Déjà Vu at a news conference Monday, after its financial crimes unit began investigating a synthetic-identity credit fraud scheme that reportedly dated back to 2016. The two-year long investigation was dubbed Project Déjà Vu, following a similar synthetic identity fraud investigation in 2014 called Operation Mouse.Det. David Coffey sai

  • Penny Boudreau granted more passes from prison 16 years after killing daughter

    A Nova Scotia woman who murdered her young daughter has been granted more escorted time outside of prison.Penny Boudreau is serving a life sentence for second-degree murder in the death of her 12-year-old daughter, Karissa, in January 2008.In a hearing earlier this month, the Parole Board of Canada approved 23 escorted temporary absences for Boudreau.Eighteen of those absences will be to participate in church-related activities for a maximum of four hours each.Four seven-hour absences have been

  • Hamilton police officer who assaulted Indigenous man in 'disturbing' act to be demoted for 1 year

    WARNING: This story contains distressing details.A Hamilton police officer will stay on the force after he violently assaulted an Indigenous man, kicking him in the head during his arrest. Brian Wren will be demoted in rank from first to second-class constable for one year and then will be reinstated to his current position, said Greg Walton, a retired Ontario Provincial Police Officer who chaired Wren's disciplinary hearing last week. As a result, Wren will earn around $14,000 less per year. Wa