Two Canadian brothers have pleaded guilty to a $23 million insider trading scheme connected to the merger of a social media network associated with former President Donald Trump. Michael and Gerald Shvartsman, who initially pleaded not guilty to securities fraud charges, have now admitted to their roles in the illegal operation.
Michael Shvartsman has been identified as the mastermind behind the scheme, allegedly using insider information about the merger to make a profit of $18.2 million. His brother, Gerald, also profited from the scheme and faces the same maximum prison sentence as Michael. The brothers are accused of tipping off friends to purchase Digital World securities before the merger announcement, and then selling them after the share price spiked.
Plea agreements for the Shvartsman brothers recommend a 4-5 year sentence for Michael and 3-4 years for Gerald, with sentencing scheduled for July 17. Both men could face deportation after serving their sentences, as they are Canadian citizens. In court, the brothers took accountability for their illegal actions.
U.S. Attorney Damian Williams condemned insider trading as a form of cheating. A third man involved in the scheme, Bruce Garelick, is set to go to trial later this month. However, no individuals associated with Trump Media have been charged with any wrongdoing in connection to the insider trading.
Meanwhile, the publicly listed Trump Media has faced volatility in its shares after reporting financial losses by its social media platform, Truth Social. Despite this, Trump’s stake in the company remains around $4 billion, although he is currently prohibited from selling his shares for the next six months.
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