Trump Media insider trading: Shvartsman sentencing memos

The prosecution is asking: new york A federal judge has sentenced two brothers to years in prison for admitting insider trading in the securities of a blank check company before announcing plans to merge with the company. trump media.

Michael Schwartsman, a Florida venture capitalist who made more than $18 million in illegal trades, will be sentenced next Thursday to 46 to 57 months in prison, prosecutors said in a court filing. I hope that it will be possible.

And they want his brother, Gerald Schwartzmansentenced to at least two years in prison for making $4.6 million in illegal transactions.

The Florida furniture company founder is scheduled to be sentenced Wednesday by Judge Louis Lehman in the same Manhattan federal court who will also sentence his brother.

Both men pleaded guilty in April in the case.

Since the brothers are not U.S. citizens, they could be convicted and deported after their sentences are completed.

Michael Schwartzman, 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 Schwartzman (47 years old) was born in Canada.

A third defendant, Bruce Garelick, chose to stand trial and was found guilty of insider trading by a jury in May.

Garerick is scheduled to be sentenced on November 7th and could receive a recommended sentence of 108 to 135 months in prison under the advisory federal sentencing guidelines.

Garelick previously served as chief strategy officer at Rocket One Capital, a Miami-based venture capital firm led by Michael Schwarzman.

He joined the board of Digital World Acquisition Corp. in 2021 after the Schwarzman brothers were invited to invest in DWAC and another so-called special purpose acquisition company.

After signing a nondisclosure agreement, the brothers received nonpublic information from Garerick that Trump Media, in which former President Donald Trump is a majority shareholder, could be a merger target.

All three bought DWAC securities based on nonpublic information about the effort and sold their shares after the stock price soared on news of a planned merger with Trump’s company, which owns the Truth Social app.

Garelick only made $49,000 in profits from the illegal trade.

The merger between Trump Media and DWAC has been postponed until March of this year. The combined company will trade under the ticker DJT.

Manhattan US Attorney’s Office Sentencing memorandum The complaint filed late Thursday said Michael Schwartzman’s actions were “blatant, manipulative, and motivated by pure greed.”

The department’s recommendation for his sentencing is consistent with what federal sentencing guidelines recommend.

michael schwartzman’s defense attorneyAlan Futerfas and Dennis Vacco, are asking Judge Lehman to sentence them below these guidelines because of his admission of responsibility in the case.

“Mr. Schwartzman paid a heavy price for his insider trading,” the lawyers wrote.

“He has lost his reputation and suffered personal and professional humiliation. He has lost banks, credit cards, customers, vendors, and significant amounts of business,” the lawyers wrote. “His wife and children are suffering and the fallout from his actions will continue to be felt. That in itself is a significant punishment.”

Prosecutors said in Thursday’s filing that the $14.7 million yacht “Provocateur” that Michael Schwarzman agreed to forfeit to the federal government to secure a money judgment was being used for a summer charter in the Mediterranean Sea. It was revealed that the property was leased by him without notifying the prosecutors in 2007, and that it continued to be leased thereafter. He moved to Italy’s Ligurian coast against a court order.

Prosecutors also said Schwartman “failed to provide financial statements” to the probation office prior to his upcoming sentencing.

“Overall, Schwartzman exhibits a troubling pattern of acting as if he is above the law,” prosecutors wrote.

“The sentence and period of supervised release imposed on Schwartzman must be such as to deter future criminal conduct.”

Probation officials are recommending a sentence of 46 months in prison for Michael Schwartzman, apparently due to his refusal to provide personal financial reports, his defense team said.

Those lawyers said in a judgment filing that the forfeiture of the “provocateur” was not necessary because the entire $18.2 million judgment he was owed had been “paid” as of Monday. .

Defense attorneys said they recommended that Schwartzman not submit financial statements to probation, invoking his Fifth Amendment right against self-incrimination.

These attorneys said the purpose of personal financial statements is to determine a defendant’s ability to pay fines.

But “there is no dispute that Mr. Schwartzman is capable of paying the fine,” the lawyers wrote, noting that he has already paid the forfeiture ordered in the case.

The minimum sentence prosecutors are seeking for Gerald Schwartzman is two years in prison, which is less than the 37 to 46 months recommended by guidelines.

The probation office is asking for a sentence of one year and one day in prison.

“The defendant is a wealthy and successful businessman,” prosecutors wrote, referring to Gerald Schwartzman, who is married and the father of two children.

“He is reported to have an annual income of more than $600,000 and live in a waterfront mansion of more than 6,000 square feet,” the filing states. “He had no need for these additional benefits. His involvement in this scheme was driven by pure greed.

However, in explaining their recommendation for Gerald Schwarzman, prosecutors said, “The government believes that defendant is the least culpable of the three defendants the court plans to sentence compared to his co-defendants.” I agree,” he wrote.

Gerald Schwartzman’s attorney, Roland Riopelle, is seeking a sentence without prison time for Lehman.

Instead, Riopelle asked the judge to sentence him to 18 months of home confinement.

Because Gerald Schwartzman does not have $4.6 million in liquid assets to surrender, “the court can only enter a forfeiture judgment against him in that amount,” the attorneys wrote in a sentencing memo.

Riopelle said that if Gerald Schwarzman is sentenced to a long prison term, his furniture company will “very likely go bankrupt and the more than 150 employees and independent contractors who work there will lose their jobs.” I wrote.

The attorney also cited Gerald Schwartzman’s “significant health issues,” including “severe back injuries,” Crohn’s disease, two surgeries to remove melanoma, and ” Acute and severe psoriasis that requires medication and special phototherapy equipment.

Crohn’s disease requires “close monitoring and regular treatment,” the application states.

Like Michael Schwartzman’s attorney, Riopelle said Gerald’s possible deportation could harm his family.

“Judge Lehman is a very serious and thoughtful judge, and he believes that the sentence we recommended is appropriate given the potential harm that would naturally occur to collateral damage that was not involved in this crime. We hope that we can convince the judge that there is,” Riopelle said in an interview.