Two Brothers and Rocket One's CIO Plead Guilty to Insider Trading in Trump Media Merger, Making $22 Million in Illegal Profit

Two men, Michael Shvartsman and Gerald Shvartsman, both from Miami-based venture capital firm Rocket One Capital, pleaded guilty to securities fraud related to insider trading in Trump Media & Technology Group (TMTG).

The trio, including Rocket One's chief investment officer, Bruce Garelick, were charged last year with illegally trading on inside information about TMTG's plan to go public through a merger with a blank-check company.

Bruce Garelick is scheduled to face trial on related charges on April 29.

Three men, including executives of Trump's social media platform Truth Social, were charged with insider trading after they signed confidentiality agreements in June 2021 to invest in Digital World Acquisition, a blank-check company.

Prosecutors allege that the trio, including Michael and Gerald Shvartsman, tipped others and bought Digital World securities before the merger with Truth Social was announced on October 20, 2021.

They made a total of $22 million in illegal profits.

The men admitted in court that they knew their actions were wrong.

Gerald Shvartsman admitted to insider trading at a hearing.

Insider trading is considered cheating by US Attorney Damian Williams.

The Shvartsmans will be sentenced on July 17, with a maximum sentence of 20 years in prison.

The average sentence for federal fraud cases last year was around two years.

TMTG, Truth Social's parent company, went public in late March and saw volatile stock activity due to election speculation.

However, the company disclosed a loss of over $58 million in 2023, causing early gains to be shed.

Trump's TMTG shares were worth around $4 billion on Wednesday, but he cannot sell or borrow against them for six months.

The company is involved in legal disputes with co-founders Wesley Moss and Andrew Litinsky in Delaware and Florida.

The founders accuse TMTG of trying to dilute their stake, while the company argues they failed to earn their shares and seeks to remove their ownership.