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Two brothers accused of participating in an insider trading scheme ahead of the public offering of former President Donald Trump's Truth Social media platform pleaded guilty Wednesday to one count of securities fraud apiece.
Florida's Michael and Gerald Shvartsman were charged with making illegal trades thanks to the nonpublic knowledge that Digital World Acquisition Corp — a SPAC — was going to acquire Trump Media & Technology Group to take it public, according to the indictment. Trump Media is Truth Social's parent company.
"Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades," US attorney Damian Williams said in a statement.
The brothers were first arrested last June. One count of securities fraud carries a maximum prison sentence of 20 years, according to the US Attorney's Office of the Southern District of New York. Both brothers are set to be sentenced in July.
They pocketed more than $22 million thanks to the scheme, according to authorities, and Michael used $14 million to buy a yacht he christened the Provocateur, The New York Times reports.
A third man, Bruce Garelick, was also charged and is set to go on trial later this month, according to the Times. Attorneys for Garelick did not immediately respond to a request for comment from Business Insider.
The indictment does not claim Trump had any involvement in the scheme.
"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," Williams' statement continued.
Elsewhere in Truth Social news, parent company Trump Media is suing its cofounders for damaging the business and attempting to thwart the DWAC merger.
Shares in Trump Media tumbled on Monday after it reported a net loss of $58 million last year and revenue of $4.1 million, causing the former president's net worth to fall by over $1 billion.
