• Three people have been charged with illegally trading shares in a shell company that later announced plans to merge with former President Donald Trump's media venture, Trump Media Technology Group.
• Michael Shvartsman, Gerald Shvartsman and Bruce Garelick allegedly pocketed $22 million in illegal profits from trading on material nonpublic information, the Justice Department said.
• DOJ does not allege wrongdoing by Trump or any of his family members.

WASHINGTON — Three Florida men were charged Thursday with insider trading of a shell company's stock before it announced plans to merge with a social media firm launched by former President Donald Trump.

The men, Michael Shvartsman, Gerald Shvartsman and Bruce Garelick, allegedly netted more than $22 million in illicit profits from trading in shares of Digital World Acquisition Corp.

All three were arrested Thursday morning, the Justice Department said.

The Securities and Exchange Commission also filed a civil complaint against Garelick, who is a board member of DWAC, the Shvartsmans, who are brothers, and Rocket One Capital LLC, a venture capital firm owned by Michael Shvartsman.

The charges do not allege wrongdoing by Trump or any of his family members.

A spokesman for TMTG did not respond to a request for comment about the allegations.

The DOJ announced the charges related to Trump Media's proposed merger as part of a string of allegations of illegal trading. They included accusations that two Pfizer employees traded on nonpublic information about trial results for its Covid treatment Paxlovid.

Digital World Acquisition Corp. is a special purpose acquisition company, or SPAC, that announced plans to merge with Trump Media & Technology Group in October 2021. The SPAC merger aimed to help TMTG go public without the lengthy process of a formal IPO.

Two investors and a board member

The insider trading complaints allege that Garelick and the Shvartsmans signed investor confidentiality agreements with DWAC in June of 2021, after which they were told about plans to merge with Trump Media. At the time, Garelick was working for Rocket One Capital.

The following month, Garelick joined the board of DWAC. As an officer, Garelick became privy to even more nonpublic information than the Shvartsmans. Specifically he received updates on the talks underway between DWAC and Trump Media, the government said.

Prosecutors allege that Garelick shared this detailed information with his boss, Michael Shvartsman, who then divulged it to his brother, Gerald. Throughout September and October of 2021, the three men repeatedly bought DWAC stock.

On the first day after news broke of the planned Trump merger, shares of DWAC soared 450%. At one point the following day, the stock was worth more than 1,000% of the pre-news stock price.

Garelick and the Shvartsmans allegedly sold all their DWAC shares during the first two days after the merger announcement.

No merger yet

As of Thursday, more than 18 months after the heady days of DWAC's brief surge, the promised merger had not happened yet.

Instead, DWAC has struggled to raise money from investors amid multiple federal investigations into its practices and its funding.

The company first revealed that it was under investigation by the Securities and Exchange Commission in a June 2022 filing. A week later, Trump's media company was subpoenaed by a grand jury in relation to the DWAC probe.

TMTG includes Truth Social, the social media platform Trump launched after Twitter banned him for his tweets on Jan. 6, 2021, when hundreds of his supporters stormed the U.S. Capitol.

DWAC shares closed at $12.66 on Wednesday. The stock has been on a downward slide since it hit a closing high of $94 on Oct. 22, 2021, after the planned merger with Trump's media group was announced.