Michael Shvartsman, hides from journalists using an umbrella after exiting Federal Court, Thursday, July 20, 2023, in New York.
- A man already charged with insider trading related to a shell company's planned merger with Donald Trump's social media firm was hit with a new money laundering count in Manhattan federal court.
- Michael Shvartsman allegedly used more than $12 million in profits from the purportedly illicit sales of Digital World Acquisition Corp. securities to buy a luxury yacht.
- Shvartsman, his brother Gerald Shvartsman and Bruce Garelick were first indicted in June on securites fraud charges related to their sale of DWAC securities.
- They allegedly bought those securities after learning about the planned merger with Trump Media & Technology Group before it became public.
A man already charged with insider trading related to a shell company's planned merger with Donald Trump's social media firm was hit with a new money laundering count in Manhattan federal court.
Michael Shvartsman was also accused in a superseding indictment unsealed Wednesday of engaging in a monetary transaction in property derived from unlawful activity.
The new indictment details two money transfers Shvartsman conducted after netting a profit of about $18.2 million from selling Digital World Acquisition Corp. securities in fall 2021. Later that year, he used a large chunk of that money to buy a luxury yacht, prosecutors allege.
Shvartsman, his brother Gerald Shvartsman and Bruce Garelick were indicted in June on securites fraud charges related to their sale of DWAC securities in fall 2021 and other conduct.
The trio of investors allegedly bought DWAC securities after learning on a confidential basis that the so-called special purpose acquisition company was eyeing a merger with Trump Media and Technology Group. TMTG includes the social media platform Truth Social, which is one of the former president's favorite methods for communicating with supporters online.
The men then sold the securities after DWAC publicly announced the planned merger, which sent DWAC's share price soaring to as high as $175 per share, the indictment alleges.
Money Report
DWAC's stock was trading at $45.71 per share as of Wednesday afternoon, and the company has yet to complete its hoped-for merger with Trump's company.
Prosecutors said that the three men jointly realized profits totaling $22 million from selling the securities, which they were prohibited from having purchased on the open market due to an agreement they had in exchange for receiving confidential information about the potential merger earlier in 2021.
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The men, who also allegedly shared DWAC's confidential information with others, have pleaded not guilty in the case.
The superseding indictment says that Michael Shvartsman, in December 2021, transferred about $8.4 million in proceeds from the DWAC securities sale to a bank account controlled partly by a business associate of his.
That account, dubbed a "Washing Account" by the new indictment, "regularly received a high volume of deposits and transmitted a high volume of withdrawals, with a consistently high running balance."
"As a result, transferring these proceeds into the Washing Account provided an effective method of concealing the source and ownership of those fundings," the indictment says.
Months later, in July 2022, Michael Shvartman transferred about $12 million in proceeds from the sale of DWAC securities to a bank account that he controlled, the indictment says.
That fall, he used those funds "to help purchase an approximately $14.7 million luxury yacht, at the time named 'Ipanema,' and since renamed 'Provocateur,' " the indictment says.
Michael Shvartsman allegedly took steps that included "the use of corporate forms, multiple bank transfers, and legal agreements, to conceal the source of the funds used to purchase the yacht, as well as the ownership and control of the yacht once acquired," the indictment says.
The indictment seeks the forfeiture of "Provocateur," three Yamaha Jet Skis tendered to that yacht, and a bank account.
Michael Shvarstman's attorney, Tai Park, declined to comment on the new charges, as did Nicholas Biase, a spokesman for the Manhattan U.S. Attorney's Office, which is prosecuting the case.
