by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, Oct 17 – As the third of four insider trading prosecutions announced on June 29, 2023 by the US Attorney for the Southern District of New York, Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick were charged with making more than $22 million dollars in illegal profits by trading in securities of Digital World Acquisition Corporation based on MNPI about DWAC’s planned but not yet public business combination with a media company founded by former President Donald J. Trump.
On July 5, the case was assigned - wheeled out - to Judge Lewis J. Liman.
Inner City Press was there on July 20 and live tweeted, thread
On December 29 as part of omnibus pre-trial motions Shvartsman filed copies of DHS reports of investigation, including audio recordings of Shvartsman saying he would open an LLC in Belize which would buy assets... and ultimately provided funding for the 'Truth Social' media platform. It also names the agents who brought the arrested defendants to the Wilke D. Ferguson Jr. Federal Courthouse and the Marshals...
Late on March 15 Shvartsman through counsel wrote to Judge Liman alleging that the US used a Lawyer Informant to record him. Counsel identified the Zoom account used: John [at] lighthousetrust [dot] ch. A Google search of that shows a Lighthouse Trust General Counsel named John Ivsan at Linhart Seuss Ivsan LLP
More on X for Subscribers here & Substack here
On April 29, jury selection began but did not end, by 6 pm. Of 34 prospective jurors in the courtroom at 5 pm, each was summoned into the robing room for questioning, seemingly with the defendant present. Three were excused at 6 pm and the rest told to return, but not to read anything about the case.
Then this request to start anew: "during today’s voir dire one prospective juror openly reported in front of the venire that she learned from the news that “[t]here are two people pleading guilty” in connection with this case. Upon the Court’s request to speak up, the juror again stated—adding detail—that “[t]here are two people pleading guilty and [Mr. Garelick] is the third person.” Voir dire continued over Mr. Garelick’s objection." Letter on Patreon here.
On April 30, after Judge Liman dismissed some but not all of the venire, the trial began. At day's end one of Garelick's lawyers, pushed for a proffer of the defense says, named three other possible tippees.
From May 1, Inner City Press thread
On May 8, the closing arguments. Inner City Press covered them. From thread:
Assistant US Attorney: They said that Trump's Truth Social was unique and was the target of the DWAC SPAC - the defendant was supposed to keep the information confidential. You don't need to read all the complicated agreements to understand it. It's an NDA
AUSA: The defendant knew the information was under a duty of trust and confidentiality. GX 418, he emailed the DWAC team, he says Note: Some of these investors may still need to sign an NDA with you. He knew.
AUSA: He was a hedge fund portfolio manager - he knew what he had to do, and he didn't do it. He wanted to hide that he was engaged in insider trading. This is a huge deal. He committed insider trading. We have proven it.
Now defense closing argument:
Defense: Bruce stopped as soon as he thought he might be exposed to material non-public information. No witness said otherwise. None really knew Bruce. The man Andy who was on the Apprentice? Lovely guy - but he didn't know Bruce
Defense: Mark Wachter? He said he was on a Skype call, but no other interaction. The only US witness who knew Bruce was Hartley Wasco - and he praised Bruce Garelick. They are trying to prove to you that someone who has never been in trouble before did this
Defense closing (still going) Defense: If Bruce Garelick had a good faith belief that he did not have material non-public information, even if it turned out to be false, you must acquit. Yes, he failed to file forms - it wasn't top of mind. Convict him on that
Defense: Jurors, I don't get to speak to you again. The government does, with a rebuttal - because they have the burden of proof. In the jury room, please ask, What would the defense say? Is there another way to see this? Jury duty is an interesting thing
Defense: When we vote, we got into the booth alone - an individual right. Jury duty, we form a community, we share out thoughts. It's a collective effort. We do this in beautiful courtroom like this, because it's solemn [100 Centre Street next door, not so much]
Judge: Jurors, it's 12:50, we'll break.
On Garelick Judge Liman (at 5:37 pm) - The jury has left for the day. They request the cross examination of Bruce Garelick and GX 751 and 122. Please do this before you leave. Good evening. Adjourned
On May 9, the jury found Garelick guilty...
On September 13, Michael Shvartsman asked to delay his sentencing to the week of October 28: "defense counsel respectfully requests to adjourn the sentence just a few weeks, to the week of October 28th. The government opposes an adjournment beyond the week of October 14th, so the issue is only 10 days. But for the reasons below, that is meaningful to defense counsel to properly prepare for Mr. Shvartsman’s sentence." Letter on Patreon here.
On October 2, Gerald Shvartsman asked for no jail time, but home confinement, when he is sentenced on October 16.
On October 10 the US Attorney's Office wrote in asking for 46 months when Michael Shvartsman is sentenced on October 17.
On October 16, Gerald got 22 months.
On October 17, after more than two hours, Michael Shvartsman got 28 months, a $1 million fine - and GPS added to his yacht. Inner City Press was there, thread:
NOW sentencing of Michael Shvartsman, after Judge asked him about conflict with Trump Media Group (Fatico hearing). He elected not to provide financial info to Probation
Judge: I have received a letter of support from a senior investigator at Homeland Security, and an anonymous letter I will not consider. Michael Shvartsman's letter: We have objections to the Pre-Sentencing Report.
Judge: I'll add that he may be subject to removal proceedings. The Guideline Sentence here is 46 to 57 months. AUSA Dan Nessim: Insider trading is serious. He made $18 million trading warrants of DWAC merging with former President Trump's media group.
AUSA: He put on DWAC's board Bruce Garelich (whose trial Inner City Press covered:Judge: What about the yacht purchase? AUSA: For now it's subject to forfeiture... The yacht was in Turkey, now they are trying to rent it out as a charter, even though the US is first in line for it.
AUSA: We had contacted the Turkish government then the yacht's transponder was turned off until it reached northwest Italy. They were trying to load the yacht into a larger boat... Judge: What about a larger fine and a sentencing below what DOJ is asking?
Michael Shvartsman's lawyer: That yacht was taken care of like someone's new-born baby - the collateral was not in danger. The government wanted to be informed of every little move. Michael Shvartsman's lawyer: Then there are the taxes - Judge: On ill-gotten gains. It's a cavalier attitude.
Michael Shvartsman's lawyer: Consider the letter from the woman with 6 children, her husband abandoned her & went to Venezuela, Michael stepped up. There's an outrageous, I mean extraordinary, letter from his former nanny, ge helps her family get out of Ukraine
Judge: We'll take a break
Now Michael Shvartsman's wife: My father was brutally murdered. Michael, he sold t-shirts on the streets of Toronto at 13. When Michael was arrested, I couldn't believe it. Then our son started stuttering. I am sorry Michael broke the Federal law
Michael Shvartsman: I've given a lot to a lot of people. I have invested in companies that employ thousands of people. I did something I should not have done. There have been negative newspaper stories that have brought out the crazies
Judge: 46 months would be disproportionate. He did not plead to money laundering. They got out of Ukraine. Mr Michael Shvartsman, I sentence you to 28 months in prison and a fine.
More on X for Subscribers here and Substack here
Watch this site.
This case is US v. Shvartsman, et al., 23-cr-307 (Liman)
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