Michael Shvartsman hides from reporters with an umbrella after leaving the federal courthouse, Thursday, July 20, 2023, in New York.
John Minchillo | AP
A man already charged with insider trading in connection with a proposed merger of a shell company with Donald Trump’s social media company has been hit with a new money laundering charge in Manhattan federal court.
Michael Shvartsman was also accused in a superseding indictment unsealed Wednesday of conducting a monetary transaction in property derived from an unlawful activity.
The new indictment details two money transfers that Shvartsman made after making about $18.2 million in profit from the sale Digital World Acquisition Corp. In autumn 2021 he sold securities. Later that year, he used much of that money to buy a luxury yacht, prosecutors allege.
Shvartsman, his brother Gerald Shvartsman and Bruce Garelick were indicted in June on securities fraud charges related to their fall 2021 sale of DWAC securities and other conduct.
The trio of investors allegedly purchased DWAC securities after learning on a confidential basis that the so-called special purpose acquisition company was considering a merger with Trump Media and Technology Group. TMTG owns the social media platform Truth Social, one of the former president’s favorite methods for communicating with supporters online.
The men then sold the securities after DWAC publicly announced the proposed merger, causing DWAC’s stock price to rise to as much as $175 per share, the indictment says.
DWAC stock was trading at $45.71 per share as of Wednesday afternoon, and the company has not yet completed its hoped-for merger with Trump’s company.
Prosecutors said the three men collectively made profits totaling $22 million from the sale of the securities, which they were barred from purchasing on the open market under an agreement in exchange for receiving confidential information about the potential merger in early 2021 was.
The men, who also allegedly passed DWAC’s confidential information to others, have pleaded not guilty in the case.
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The superseding indictment states that in December 2021, Michael Shvartsman transferred approximately $8.4 million in proceeds from the DWAC securities sale to a bank account partially controlled by one of his business partners.
This account, which is referred to in the new indictment as a “laundry account,” was used to make “regularly high volumes of deposits and high volumes of withdrawals with a consistently high current account balance.”
“As a result, the transfer of these proceeds to the laundering account constituted an effective method of concealing the source and ownership of these funds,” the indictment states.
Months later, in July 2022, Michael Shvartman transferred approximately $12 million in proceeds from the sale of DWAC securities to a bank account he controlled, the indictment says.
That fall, he used those funds “to support the purchase of an approximately $14.7 million luxury yacht, then called the Ipanema and since renamed the Provocateur,” the indictment says.
Michael Shvartsman allegedly took steps that “included the use of corporate forms, multiple bank transfers, and legal arrangements to conceal the source of funds used to purchase the yacht, as well as the ownership and control of the yacht after acquisition.” says the indictment.
The indictment seeks to confiscate “Provocateur”, three Yamaha jet skis given for this 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 U.S. Attorney’s Office in Manhattan, which is prosecuting the case.
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2024-02-07 20:15:00
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