Three Florida men have been charged with insider trading related to Donald Trump’s Truth Social media platform’s deal to merge with a special purpose acquisition company, earning them close to $23 million in illegal profits, federal prosecutors said.
Bruce Garelick, 53, of Fort Lauderdale, was an investor in the Digital World Acquisition Company
DWAC,
a SPAC, or so-called blank check company, and became a member of its board in September 2021 before its merger with the Trump Media & Technology Group Corp. was made public.
Prosecutors say Garelick, who was the chief strategy officer at Rocket One Capital, LLC in Miami, used his position on the board to funnel insider information on the impending merger to his boss, Michael Shvartsman, 52, of Sunny Isles Beach, calling it “intelligence.”
Shvartsman, a former- nightclub proprietor who founded Rocket Capital in 2013, then allegedly passed the info on to his brother, Gerald Shvartsman, and the two began buying up DWAC shares.
Prosecutors say that the three men also passed on the insider information to friends on a trip to Las Vegas, to Michael Shvartsman’s neighbors and to Gerald Shvartsman’s employees at a furniture supply store he owned.
Shortly after the merger deal between DWAC and Trump’s group was announced in October 2021, shares rose from just $10 to as high as $175. Prosecutors say Garelick and the Shvartsmans quickly dumped their shares, earning a profit of $22.9 million.
In addition to the criminal charges brought by the U.S. Attorney’s office in Manhattan, the three men were additionally hit with similar civil charges by the Securities and Exchange Commission.
Garelick and the Shvartsmans were arrested on Thursday morning and couldn’t immediately be reached for comment. It wasn’t immediately clear if they had yet retained attorneys.
In June 2022, DWAC announced in a public filing that it was under investigation by the SEC. While the merger was announced in 2021, it has yet to be completed, as DWAC has struggled to raise money following the disclosure that it was under investigation.
Former-President Trump, who faces charges of allegedly making hush-money payments to silence womens’ stories of having had affairs with him and for allegedly taking classified documents with him when he left office, is not accused of any wrongdoing in the insider-trading case.
This post was originally published on Market Watch
