Two brothers from Miami pleaded guilty on Wednesday in federal court in Manhattan for their role in a nearly $23 million insider-trading scheme surrounding the 2021 announcement that former President Donald J. Trump’s social media company planned to merge with a cash-rich shell company.
Michael and Gerald Shvartsman, who had pleaded not guilty to securities fraud charges last summer, were set to go on trial later this month. But the brothers decided this week to forgo a trial, instead entering their guilty pleas before Judge Lewis J. Liman of U.S. District Court for the Southern District of New York.
Each man pleaded guilty to one count of securities fraud.
Michael Shvartsman, according to federal prosecutors, was the mastermind of the scheme to profit from the announcement, in October 2021, that Trump Media & Technology Group planned to merge with Digital World Acquisition Corporation, a shell company that had just raised $300 million in an initial public offering. The authorities charged Michael Shvartsman, 53, a Miami financier, with making $18.2 million in illicit trading profits; and his brother, 46, who owns an outdoor furnishing store in Miami, with raking in $4.6 million.
Michael Shvartsman, who ran a venture investment firm called Rocket One, used some of the proceeds from the scheme to buy a $14 million luxury yacht that he named Provocateur.
The brothers each face prison sentences of up to 20 years. Their plea agreements with the government recommend a sentence of roughly four to five years for Michael Shvartsman; and three to four years for Gerald Shvartsman.
Judge Liman, who is not bound by those recommendations, set sentencing for both men for July 17.
The brothers are Canadian citizens and could face deportation at the end of their sentences.
