‘TICKET TO PRISON’

Brothers Plead Guilty in Trump Media Insider Trading Scheme

As part of a plea deal, prosecutors recommended their sentences be between three and five years.

Two brothers struck a deal with prosecutors Wednesday and pleaded guilty to coordinating a $23 million insider trading scheme tied to the merger of Donald Trump’s social media network with a shell company.

The brothers, Michael and Gerald Shvartsman, had pleaded not guilty to securities fraud charges last summer and were set to go to trial this month in Manhattan.

Prosecutors said Michael, a Miami financier, was the mastermind of the operation, which sought to profit off the announcement of Trump Media & Technology Group’s merger with Digital World Acquisition Corporation, which finally went through last week after years of delays.

The feds alleged that the brothers knew of the acquisition before the public and used that knowledge to profit millions, which they used to purchase lavish gifts for themselves—like a $14 million luxury yacht that Michael allegedly bought with the $18.2 million he profited from illicit trading.

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Gerald, 46, pulled in just $4.6 million in illicit funds, but faced the same maximum prison sentence as his 53-year-old brother—20 years behind bars.

Prosecutors said the men caught wind of merger talks with TMTG and secretly tipped off their pals to purchase Digital World securities, which they quickly sold after a deal was announced and there was a spike in the share price on Oct. 20, 2021.

The plea agreements recommend a sentence of roughly four to five years for Michael, and three to four years for Gerald. They’ll be forced to hand over their trading gains as part of their plea deal.

District Judge Lewis J. Liman, who’s not bound to sentence the brothers to prosecutors’ recommendation, set their sentencing date for July 17. Both men are Canadian citizens and could face deportation after their sentences.

In court Wednesday, The Guardian reported that the brothers took accountability for the illegal trades.

“I’ve made a terrible mistake,” Gerald said, according to the paper. The New York Times reported that Michael spoke similarly, saying, “I understand these trades were unlawful.”

Damian Williams, the U.S. Attorney for the Southern District of New York, said in a statement that the brothers were “cheating” the system and deserved to pay for it.

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“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,” he said.

Despite the guilty pleas, the insider trading saga isn’t over just yet. A third man charged in the scheme, Bruce Garelick, is still scheduled to go to trial later this month. Prosecutors say he profited less than $50,000 in the scheme, but was critical in getting word to the brothers about the acquisition ahead of time.

Nobody associated with Trump Media was charged with any wrongdoing, though the co-founders of Truth Social find themselves in a separate legal battle with Trump over the company’s shares.

TMTG was publicly listed for the first time last week, and its shares have been particularly volatile—fueled by an SEC filing Monday that said Truth Social, its only revenue stream, lost $53 million in 2023. That caused the stock to shed any early gains, but Trump’s stake in the company remained around $4 billion by Wednesday afternoon.

Trump is barred from touching his shares in the company for six months, however, which was part of an agreement he struck with the shell company Trump Media merged with. He’s remained largely mum on his company’s stock since it went public.

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