A federal grand jury in New York on Thursday indicted an investor insider trading In shares of a shell company before announcing a merger in October 2021 Trump Media.
investor, Bruce Garelickwas on the board of directors of a publicly traded company, Digital World Acquisition Corp.at the time, he was accused of sharing and using non-public information about plans to merge with then-private Trump Media, the owner of Truth Social.
The main shareholder of Trump Media is the former president Donald TrumpThe case against Garelick in US District Court in Manhattan was not charged with any wrongdoing.
But Garelick’s trial, which began on April 30, took place just blocks away from where Trump was tried in Manhattan Supreme Court on criminal charges related to hush money payments to porn star Stormi Daniels.
Two of Garelik’s co-defendants, brothers Michael and Gerald Schwartzman, pleaded guilty to insider trading charges on April 3.
Jurors in Garelik’s case began deliberating Wednesday afternoon after hearing closing arguments from prosecutors and the defense. After several hours of deliberations on Thursday, jurors returned guilty verdicts against Garelik, 54, on five counts of securities fraud and conspiracy.
The verdict of Garelik, who testified in his court, was set for September 12.
Garelick was an investment advisor at Michael Schwartzman’s venture capital firm Rocket One Capital. Prosecutors said that after Garelick joined DWAC’s board, he shared with the Schwartzman brothers non-public material about DWAC’s plans to merge with Trump Media in 2021.
All three men later bought DWAC stock based on that non-public information and later sold the stock after the price spiked following the announcement of the deal to merge with Trump Media, prosecutors said.
Garelick made just $49,000 from the illegal trade, but the Schwartzmans made $23 million, according to prosecutors.
“Bruce Garelick was part of a sophisticated group of individuals who were invited to invest in Digital World Acquisition Corporation, a special purpose acquisition firm that raised funds with the intention of later investing in the target company, Trump Media & Technology Group. is still public knowledge,” Manhattan US Attorney Damian Williams said in a statement Thursday.
“When given the opportunity, Garelick promised to keep information about DWAC’s interest in acquiring Trump Media confidential and not use it for stock market trading. Garelick was also given a seat on DWAC’s board, giving him direct access to additional non-public information about the acquisition,” Williams said.
“As a unanimous jury has just determined, Garelick clearly violated the law by using the information he obtained as an insider at DWAC to trade and inform others,” the attorney general said. “Garelick’s federal conviction is another stark reminder that insider trading is always a losing bet.”
DWAC and Trump Media completed their merger in late March. Open trading of the company’s shares under the new DJT ticker began a day later.
last week, Securities and Exchange Commission Trump Media’s auditor charged what the regulator said “massive fraud” iCovers auditor’s accounting work for hundreds of publicly traded companies that affect 1,500 SEC filings.
auditor, BF Borgers CPAand its owner, Benjamin Borgers, agreed to be permanently disbarred from practicing as an accountant before the SEC and to pay a total of $14 million in civil penalties.
Trump Media hired a new auditor, Semple, Marchal & Cooper LLP last weekend to replace BF Borgers.