Two Florida brothers pleaded guilty Wednesday to insider trading charges, admitting making over $22 million illegally before the public announcement in 2021 that an acquisition firm was taking former President Donald Trump’s media company public.

Michael and Gerald Shvartsman entered their pleas to a single count of securities fraud in Manhattan federal court, where Judge Lewis J. Liman set sentencing for July 17.

The men said that they knew they were committing a crime when they made trades in October 2021 through a New York broker, buying shares of Digital World Acquisition Corp., a so-called blank check company designed to take another company public without an IPO. The pair had been tipped off that Digital World had planned to merge with Trump Media & Technology, whose main asset is the social media network Truth Social. 

In October 2021, shares of Digital World soared more than 800% after the deal with Trump Media was announced.

The indictment against the brothers did not in any way implicate Trump — who is again seeking the presidency this year — or Trump Media & Technology Group, which last week began trading on the Nasdaq stock market and currently has a value of about $6.7 billion. Trump owns about 57% of the company.

“I’ve made a terrible mistake,” Gerald Shvartsman told the judge as he pleaded guilty. He added that it was “wrong and the mistake I will pay for dearly the rest of my life.”

His brother told the judge that he knew that his securities trades were wrong and illegal.

According to the indictment, the men invested millions of dollars in Digital World, and then sold the securities for $22 million in profits after the news about the Trump Media business was made public.

Sharing secrets with friends

At the time, Michael Shvartsman owned Rocket One Capital LLC, a venture capital firm, according to court papers.

According to court papers, the men shared their secrets with friends and employees, who also bought tens of thousands of units of securities ahead of the merger announcement with Trump Media & Technology Group.

The merger and public trading of Trump Media & Technology Group was eagerly anticipated by Trump’s political supporters, who viewed the Truth Social platform as a worthy response to Trump’s temporary ejection from some social media platforms after the Jan. 6, 2021, insurrection at the U.S. Capitol.

Michael Shvartsman, 53, of Sunny Isles Beach, Florida, and his brother Gerald Shvartsman, 46, of Aventura, Florida, remain free on bail while they await their sentencings. They were both arrested last June.

Federal sentencing guidelines in plea letters signed by the men recommended that Michael Shvartsman receive about four years in prison and his brother spend at least three years behind bars. The deals also call for Michael Schvartsman to forfeit $18.2 million in profits and for his brother to relinquish $4.6 million.

In a release, U.S. Attorney Damian Williams said: “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.”