Michael Shvartsman and Gerald Shvartsman, two brothers, admitted guilt on Wednesday for insider trading. They contributed to Donald Trump’s recently announced social media business.
Federal prosecutors in New York issued the statement. The brothers made millions through stock transactions. These transactions included Digital World Acquisition Corporation. This was before the merger with Trump Media.
Michael Shvartsman, 52, of Sunny Isles Beach, Florida, and Gerald Shvartsman, 45, of Aventura, Florida, were arrested last July on securities fraud charges. On Wednesday, Michael Shvartsman and Gerald Shvartsman each pled guilty to one count of securities fraud.
Their sentencing is scheduled for July, and they may face up to 20 years in prison. However, prosecutors have agreed to recommend a sentence of approximately three years for each.
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“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,” said U.S. Attorney Damian Williams. “Insider trading is cheating, plain and simple.”
Prosecutors discovered that the brothers purposefully appointed an accomplice to the DWAC board of directors. This source gave them critical information about the merger with Trump Media, which the brothers used for trading purposes. Prosecutors said that they made a total of $22 million in unlawful proceeds.
There was no indication that former President Trump was aware of the brothers’ acts and was not charged in the case. After going public, Trump Media began trading on the Nasdaq exchange last month.
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You can now purchase a part of the firm behind former President Donald Trump’s Truth Social platform for around $70. Trump Media & Technology Group, ticker symbol DJT, began trading on the Nasdaq on Tuesday morning.
This followed a vote between Trump Media and Digital World Acquisition Corporation, a special-purpose acquisition firm. The company’s market capitalization is about $2.7 billion.
As of early trading Tuesday, Trump owns 58 percent of the company’s stock, worth more than $5 billion. Because of a lockup agreement designed to avoid a fast selloff and maintain investor trust, Trump cannot sell or leverage his position in the company for at least six months.
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However, the company’s profitability has already helped to increase Trump’s net worth. Trump, who joined the Bloomberg Billionaires Index for the first time, has a reported net worth of $6.5 billion.
Trump Media faces profitability issues, according to a recent SEC filing. The success of new social media enterprises is unpredictable. In the first nine months of 2023, Trump Media earned less than $3.4 million in revenue.
However, it lost $49 million within that period. Shares of Digital World Acquisition Corp performed well before the transaction. This is due in part to the backing of smaller investors.
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