Brothers Illegally Profited From Trump’s Media Company Using Insider Information: Attorney Warns This Is ‘A Ticket To Prison’

In a recent development, two brothers have admitted to their participation in a $22 million insider trading scheme linked to the company that brought former President Donald Trump’s social media company Trump Media & Technology Group DJT to the public market.

What Happened: Florida-based venture capitalist Michael Shvartsman, 53, and his younger brother, Gerald, 46, have pleaded guilty to a single count of securities fraud in federal court. The crime they admitted to carries a maximum sentence of 20 years in prison. The sentencing hearing for the Shvartsmans has been set for July 17 by U.S. District Judge Lewis Liman, reported The Hill.

The brothers were charged with illegal trading on nonpublic information in October 2021. The information pertained to Digital World Acquisition Corp. (DWAC), a special purpose acquisition company, planning to merge with Trump Media & Technology Group, the parent company of social media platform Truth Social.

The Department of Justice alleges that the brothers acquired confidential details about the deal, including its announcement timeline, and subsequently purchased millions of dollars’ worth of DWAC securities on the open market before the merger with Trump Media was publicly announced.

U.S. Attorney Damian Williams stated in a Department of Justice press release, “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.”

“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,” said Williams, according to the report.

The Shvartsmans were arrested in June last year, along with Bruce Garelick, an employee at Michael Shvartsman’s Rocket One Capital venture firm. Garelick, who was appointed to DWAC’s board of directors, is accused of providing the brothers with crucial information about the impending deal in 2021. Garelick’s trial is set to commence at the end of this month.

See Also: Trump’s Niece Says Ex-President’s ‘Scheme Might Already Be Backfiring’ After TMTG Stock Plunge Erodes His Net Worth: ‘Donald’s Bubble Pops’

Why It Matters: The insider trading scandal is one of several setbacks that have plagued the SPAC merger since its announcement in October 2021.

The stock of Trump Media & Technology Group came under pressure earlier when the company disclosed significant losses last year.

Recently, Trump filed a lawsuit against the company’s co-founders alleging they carried out “ceaseless attempts to thwart” the company’s blank check merger.

Price Action: On Wednesday, shares of Trump Media & Technology rose 0.4% to $61.58 in the regular session. The shares were up 0.5% in the after-hours trading, according to data from Benzinga Pro.

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