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Defendant Gerald Shvartsman: possible prison sentence of up to 20 years
Photo: Amr Alfiky / REUTERS
Two Florida brothers pleaded guilty to stock market fraud on Wednesday. As the British newspaper "The Guardian" reports, in 2021 they learned of Donald Trump's plans to take the media group Trump Media public. The men - two brothers named Michael and Gerald Shvartsman and the informant Bruce Garelick - earned $23 million by selling warrants and shares in the special purpose vehicle involved, Digital World, after the IPO was announced.
All three defendants had originally pleaded not guilty but changed their strategy in light of the evidence. But in court filings, the District Attorney's Office for the Southern District of New York paints a comprehensive picture of the three men who made millions from illegal businesses. When prosecutors began investigating Michael Shvartsman for money laundering, the brothers agreed with federal prosecutors to plead guilty to one count of securities fraud in order to avoid a trial in federal district court in New York.
Michael Shvartsman was ordered to return $18.2 million in ill-gotten gains and a motor yacht. His brother Gerald paid $4.6 million. In return, the prosecution asked for only four to five years in prison for Michael Shvartsman and three to four years for Gerald. However, presiding US District Judge Lewis Liman is not bound by the agreement and can impose prison sentences of up to 20 years.
The third co-defendant, Bruce Garelick, is scheduled to go on trial at the end of April. Prosecutors accuse him of playing a key role in leaking non-public information about the expected merger with Trump Media. According to the indictment, his winnings were almost $50,000.
The circumstances leading up to Trump Media's IPO led to investigations in 2021 that put almost the entire project at risk. To avoid bankruptcy in 2022, Trump Media accepted $8 million in loans from a company called ES Family Trust, which, according to the Guardian, is run by a Russian-American businessman named Anton Postolnikov. Postolnikov himself was targeted by investigators as part of the criminal investigation.
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