The Shvartsman brothers who pleaded guilty to one count of securities fraud for their involvement in an insider trading scheme, were recently sentenced to serve time in prison for their roles in the scheme. Michael and Gerald Shvartsman allegedly generated more than $22 million in illegal profits in connection with trades made in advance of the merger of Digital World Acquisition Corporation (“DWAC”) with the Trump Media & Technology Group in 2021. According to court documents, they allegedly purchased DWAC securities in violation of a non-disclosure agreement (“NDA”) they signed when they agreed to receive confidential information from two special purpose acquisition companies, one of which was DWAC.
According to judgments filed on November 1, 2024, Michael and Gerald were sentenced to prison terms of 28 months and 22 months, respectively. Each brother also received three years of supervised release. Michael was additionally ordered to pay a $1 million fine and, according to a Final Order of Forfeiture, must forfeit more than $11 million that was formerly held in a bank account that he owned or controlled. Gerald was ordered to pay a $500,000 fine and, pursuant to a Consent Preliminary Order of Forfeiture, agreed to pay a $4.6 million money judgment.
Their co-defendant, Bruce Garelick, was also sentenced on November 7, 2024. Garelick, who served on DWAC’s board of directors in 2021 and allegedly shared material non-public information with the brothers regarding DWAC’s impending acquisition, was convicted by a federal jury of securities fraud and conspiracy to commit securities fraud in May 2024. Several media outlets reported that Garelick was sentenced to 28 months in prison for his role in the scheme. According to a Consent Preliminary Order of Forfeiture filed on November 12, 2024, he was also ordered to pay a money judgment of approximately $50,000.
Judgment – Michael Shvartsman | Final Order of Forfeiture – Michael Shvartsman | Judgment – Gerald Shvartsman | Consent Preliminary Order of Forfeiture – Gerald Shvartsman | Consent Preliminary Order of Forfeiture – Bruce Garelick | Superseding Indictment