The Shvartsman brothers face potential years in prison for insider trading at Trump Media.

• Two brothers are facing years in prison for insider trading in a blank-check company's securities before it announced a planned merger with Trump Media, as prosecutors seek a sentence from a New York federal court judge.
• Michael and Gerald Shvartsman were found guilty in a case concerning their trading of Digital World Acquisition Corp. securities.
• Trump Media, which began publicly trading after merging with DWAC in March, is majority-owned by former President Donald Trump.

Two brothers are facing years in prison for their insider trading in a blank-check company's securities before it announced a planned merger with .

A court filing reveals that prosecutors are seeking to sentence Florida venture capitalist Michael Shvartsman, who made over $18 million in illegal trading profits, to between 46 months and 57 months in prison next Thursday.

They want Gerald Shvartsman, his brother, to receive at least two years in prison for his illegal trading, which resulted in earnings of $4.6 million.

The founder of a Florida furniture company will be sentenced by the same Manhattan federal court judge, Lewis Liman, on Wednesday, along with his brother.

Both men pleaded guilty in April in the case.

The completion of their criminal sentences may result in the deportation of the brothers, who are not U.S. citizens.

Michael Shvartsman, 53, was born in Ukraine when it was part of the Soviet Union. His family emigrated to Italy in 1974, and then a year later to Toronto, Canada. Gerald Shvartsman, 47, was born in Canada.

In May, a jury convicted Bruce Garelick, the third defendant, of insider trading after he opted to stand trial.

Garelick, scheduled for sentencing on Nov. 7, may receive a federal prison term ranging from 9 years to 11.5 years under guidelines that are merely advisory.

Rocket One Capital's Miami-based venture capital firm had been led by Garelick as its chief strategy officer.

In 2021, the Shvartsman brothers invited investment in Digital World Acquisition Corp., resulting in the appointment of a new director.

Garelick disclosed to the brothers that Trump Media, which is majority-owned by former President Donald Trump, is a possible target for a merger after they signed confidentiality agreements.

The three men bought DWAC securities based on confidential information about the merger with Trump's company, which owns Truth Social, and then sold their shares after the stock price increased following the news of the planned merger.

Garelick earned just $49,000 from the illegal trades.

The merger between Trump Media and DWAC was postponed until March. The resulting company operates under the ticker symbol.

The Manhattan U.S. Attorney's Office stated in a sentencing memorandum filed Thursday that Michael Shvartsman's actions were "manipulative and driven solely by greed."

The office's recommendation for his sentence aligns with federal sentencing guidelines.

Michael Shvartsman's lawyers, Alan Futerfas and Dennis Vacco, are requesting that Judge Liman impose a lighter sentence on him, based on his acceptance of responsibility in the case.

The lawyers wrote that Mr. Shvartsman had to pay a high price for his insider trading.

"The attorneys wrote that he has lost his reputation and suffered humiliation both personally and professionally. He has lost significant amounts of business through the loss of banking, credit cards, customers, and vendors. Additionally, his wife and children have suffered, and there will continue to be huge collateral consequences of his actions, which is a significant punishment in and of itself."

In a Thursday filing, prosecutors disclosed that Michael Shvartsman had leased a $14.7 million yacht, "Provocateur," for summer charters in the Mediterranean without informing them and had subsequently moved it to Italy's Ligurian coast in violation of a court order.

The Prosecution claimed that Shvartman did not submit financial statements to the Probation Office prior to his impending sentencing.

Prosecutors wrote that Shvartsman displayed a concerning behavior of behaving as if he was above the law.

"The sentence and term of supervised release imposed on Shvartsman must prevent him from committing any future crimes."

Michael Shvartsman is being recommended for a 46-month prison sentence by Probation Office officials, according to his defense lawyers, who claim it's because he refused to provide a personal financial statement.

The lawyers in the sentencing submission pointed out that the full $18.2 million money judgment owed by him has been paid as of Monday, so there is no need to forfeit "Provocateur."

Probation was advised by defense lawyers not to submit a financial statement from Shvartsman, citing his Fifth Amendment right to remain silent.

The purpose of a personal financial statement is to assess a defendant's capacity to pay a penalty, as stated by those lawyers.

The lawyers wrote that there is no dispute that Mr. Shvartsman has the ability to pay a fine, as he has already paid the forfeiture ordered in the case.

The recommended sentence for Gerald Shvartsman is longer than the minimum two years in prison that prosecutors want.

The Probation Office suggests that he receive a one-year prison sentence, plus one day.

Gerald Shvartsman, a wealthy and successful businessman, is a married father of two children, according to prosecutors.

The filing stated that he earned an annual income of over $600,000 and lived in a waterfront mansion with more than 6,000 square feet. However, the filing added that he did not require these extra profits as he was motivated solely by greed to engage in the scheme.

Gerald Shvartsman is the least culpable of the three defendants who will be sentenced by the Court, according to prosecutors' recommendation.

Gerald Shvartsman's lawyer, Roland Riopelle, is requesting a sentence from Liman that does not include any time in prison.

Riopelle requested the judge impose 18 months of house arrest on him.

In his sentencing memo, the attorney stated that Gerald Shvartsman lacks $4.6 million in liquid assets to surrender, therefore, the court should enter a forfeiture judgment against him in that amount.

If Gerald Shvartsman receives a lengthy prison sentence, there is a high probability that his furniture company will fail, resulting in the unemployment of the 150+ employees and independent contractors who work there.

The lawyer mentioned Gerald Shvartsman's "serious health issues," including a "back injury," Crohn's disease, two melanoma removal procedures, and "an acute and severe form of psoriasis that necessitates medication and a special light therapy device."

Regular treatments and close monitoring are necessary for managing Crohn's disease, according to the filing.

Riopelle stated that the potential deportation of Gerald could harm his family, similar to Michael Shvartsman's lawyers' argument.

Riopelle stated in an interview that Judge Liman is a serious and thoughtful judge, and they hope that the potential harm to collateral persons who were not involved in the crime will convince the judge to agree with their recommended sentence.