Michael Shvartsman walks in Federal Court in Manhattan, New York, US, on July 20, 2023.
Amr Alfiky | Reuters
The prosecutor asks a New York The judge of the Federal Court has sentenced two brothers to one year in prison on the charge of acquiescence insider trading before announcing a planned in the securities of a blank check company fusion with Trump Media.
Prosecutors want Florida venture capitalist Michael Shvartsmanwho amassed more than $18 million in illegal trading profits, will be sentenced next Thursday to 46 to 57 months in prison, a court filing shows.
And they want his brother, Gerald Schwartzmanhe was sentenced to at least two years in prison for his illegal trade, which earned him $4.6 million.
The founder of the Florida furniture company will be sentenced Wednesday by the same Manhattan federal court judge Lewis Liman, who will sentence his brother.
Both men pleaded guilty to the charge in April.
The brothers can be deported for criminal convictions after serving their sentences because they are not US citizens.
Michael Shvartsman, 53, was born in Ukraine when it was part of the Soviet Union. His family immigrated to Italy in 1974, and a year later to Toronto, Canada. Gerald Shvartsman, 47, was born in Canada.
Bruce Garelick walks in Federal Court in Manhattan, New York, on July 20, 2023.
Amr Alfiky | Reuters
The third defendant, Bruce Garelickhe chose to go to trial and in May a jury convicted him of insider trading.
Garelick, who will be sentenced Nov. 7, faces a recommended sentence of 108 months to 135 months in prison under federal sentencing guidelines, which are advisory.
Garelick was chief strategy officer at Michael Shvartsman’s Miami-based venture capital firm Rocket One Capital.
He became a director of Digital World Acquisition Corp. in 2021 after being invited by the Shvartsman brothers to invest in DWAC and another so-called special purpose acquisition company.
The brothers received public information from Garelick about Trump Media — whose principal owner is the former president — Donald Trump — being a potential merger target after signing non-disclosure agreements.
Former US President and Republican presidential candidate Donald Trump speaks at a campaign rally in Butler, Pennsylvania on October 5, 2024 after his first terrorist attack.
Jim Watson | Afp | Getty Images
The three men bought DWAC stock based on non-public information related to that effort and then sold the stock after the stock price spiked following news of a planned merger with Trump’s company, which owns the Truth Social app.
Garelick made just $49,000 from the illegal trades.
Trump Media’s merger with DWAC was delayed until last March. The combined company trades under the ticker DJT.
The US Attorney’s Office in Manhattan, in one memory of judgment filed late Thursday, said Michael Shvartsman’s behavior was “forceful, manipulative and driven by pure greed.”
The bureau’s sentencing recommendation is in line with what federal sentencing guidelines recommend.
by Michael Shvartsman defense lawyersAlan Futerfas and Dennis Vacco are asking the judge to sentence Liman below those guidelines, citing that he has accepted responsibility in the case.
“Mr. Shvartsman has paid a heavy price for his insider trading,” those lawyers wrote.
“He has lost his reputation and suffered humiliation both personally and professionally. He has lost a significant amount of business through the loss of banks, credit cards, customers and vendors,” the attorneys wrote. “His wife and children have suffered and his actions will continue to have significant collateral consequences, which in itself is a significant punishment.”
Prosecutors revealed in Thursday’s filing that Michael Shvartsman, who he agreed to forfeit to the federal government, chartered a $14.7 million yacht, the “Provocateur,” for summer cruises in the Mediterranean without notifying prosecutors and has had it ever since. He went to the Ligurian coast of Italy, in violation of the court order.
Prosecutors also said Shvartman “has not provided financial disclosures” to the Probation Office ahead of his upcoming sentencing.
“Overall, Shvartsman exhibits a disturbing pattern of acting as if he is above the law,” prosecutors wrote.
“The sentence and terms of supervised release imposed on Shvartsman should serve as a deterrent to future crimes.”
Probation Office officials are recommending that Michael Shvartsman be sentenced to 46 months in prison for apparently refusing to submit a personal financial statement to the office, his defense attorneys said.
Those attorneys stated in their sentencing filing that the $18.2 million money judgment owed to him has been “paid” as of Monday, so there’s no need to lose “Provocateur.”
Defense attorneys said they advised Shvartsman not to submit a financial statement to Probation, citing his Fifth Amendment right against self-incrimination.
Those lawyers said the purpose of the personal financial statement is to determine a defendant’s ability to pay the fine.
But “there is no dispute that Mr. Shvartsman has the ability to pay the fine,” the lawyers wrote, noting that he has already paid the forfeiture ordered in the case.
The minimum two-year prison sentence prosecutors are seeking for Gerald Shvartsman is below the 37 to 46 months recommended by those guidelines.
The Homeland Security Office recommends a prison sentence of one year and one day.
“The defendant is a wealthy and successful businessman,” prosecutors wrote of Gerald Shvartsman, who is a married father of two.
“She reports an annual income of over $600,000 and lives in a beachfront mansion of over 6,000 square feet,” the filing states. “He had no need for these extra profits. His engagement in this scheme was motivated by sheer greed.
But, “The Government concedes that, compared to his co-defendants, defendant is the least culpable of the three defendants to be sentenced by the Court,” prosecutors wrote in explaining their recommendation to Gerald Shvartsman.
Roland Riopelle, Gerald Shvartsman’s lawyer, is asking Liman for a non-custodial sentence.
Instead, Riopelle asked the judge for an 18-month prison sentence.
The attorney wrote in his sentencing notice that Gerald Shvartsman does not have $4.6 million in liquid assets to surrender, “so the Court should enter a forfeiture judgment against him in that amount.”
Riopelle wrote that if Gerald Shvartsman is sentenced to a long prison term, there is a “very real possibility” that his furniture company “will go bankrupt and the 150 employees and independent contractors who work there will be out of a job.”
The attorney also cited Gerald Shvartsman’s “significant health issues,” including a “severe back injury,” Crohn’s disease, two procedures to remove melanoma, and “an acute and severe form of psoriasis that requires medication and a special light therapy device.”
Crohn’s disease requires “close monitoring and regular treatments,” the filing says.
Like Michael Shvartsman’s attorneys, Riopelle said Gerald’s possible deportation could hurt his family.
“Judge Liman is a very serious and thoughtful judge and we hope that the potential harm that will naturally occur to people here who were not involved in this crime will convince the judge that the recommended sentence is a good one,” Riopelle said in an interview.
