Two brothers who helped fund former President Donald Trump’s now-public social media company pleaded guilty on Wednesday to insider trading.
According to federal authorities in New York, Michael Shvartsman and Gerald Shvartsman gained millions of dollars trading shares of Digital World Acquisition Corporation before it merged with Trump Media.
Michael Shvartsman, 52, of Sunny Isles Beach, Florida, and Gerald Shvartsman, 45, of Aventura, Florida, were arrested for securities fraud in July.
They each pleaded guilty on Wednesday to one count of securities fraud.
Each of them faces up to 20 years in prison when they are sentenced in July, although prosecutors decided to suggest a three-year sentence.
“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,” the U.S. Attorney’s Office said. “Insider trading is cheating, plain and simple.”
Prosecutors said the brothers appointed an accomplice to DWAC’s board of directors, who provided them with important information regarding the merger with Trump Media, which the brothers subsequently traded. Prosecutors alleged they made $22 million in unlawful earnings together.
There was no proof that former President Trump was aware of the brothers’ actions, and he was not involved in the case.
Trump Media went public last month and now trades on the Nasdaq exchange.