Following the Money: The Shvartsman Brothers' $22.9 Million Insider Trading Scheme Explained for Journalism Students

# Following the Money: The Shvartsman Brothers' $22.9 Million Insider Trading Scheme Explained for Journalism Students

Nobel Pardon Prize Research Desk | November 18, 2025 | New York, N.Y.

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On April 3, 2024, Michael Shvartsman and his brother Gerald walked into federal court in Manhattan and each pleaded guilty to one count of securities fraud. Together they admitted to making more than $22 million in illegal profits by trading in DWAC stock based on a tip from a company insider. By November 2024, they were sentenced to 28 and 22 months in federal prison, respectively.

For journalism students learning to cover financial crime, the Shvartsman case is an ideal teaching case. The money trail is well-documented, the actors are named, the timeline is precise, and every key fact is available in public government records.

The Structure of the Scheme

The DOJ's account, drawn from the April 2024 plea announcement and the original SEC civil complaint, describes a three-node tipping chain:

Node 1: Bruce Garelick (the insider). As a DWAC board member, Garelick had direct access to nonpublic information about the company's negotiations with TMTG. He had signed a confidentiality agreement prohibiting him from trading or tipping. Node 2: Michael Shvartsman (the first tippee). Garelick's boss at Rocket One Capital, a venture capital firm based in Florida. Shvartsman received the tip from Garelick, then placed trades through a Rocket One Capital brokerage account — obscuring the connection between the individual and the trade. Node 3: Gerald Shvartsman (the second tippee). Michael's brother. He received the tip from Michael and traded in his own account.

Each step in this chain represents a distinct legal violation. Garelick breached his fiduciary duty and his confidentiality agreement. Michael Shvartsman breached his own confidentiality agreement (he had signed one when invited to invest in the SPAC) and received a tip he knew came from a breach. Gerald Shvartsman received a tip from someone he knew was trading on inside information.

The Numbers: How to Follow the Money in Court Documents

Journalism students are often told to "follow the money," but rarely shown exactly how. In securities fraud cases, the money trail appears in several document types:

| Document Type | What It Shows | Where to Find It |

|--------------|---------------|-----------------|

| SEC civil complaint | Alleged trade dates, share quantities, prices paid | SEC Litigation Releases |

| DOJ indictment / information | Criminal charge details, alleged profits | PACER or DOJ press releases |

| Guilty plea allocution | Defendant's own admission of facts | Court records, reported by press |

| Sentencing order / forfeiture order | Exact amount of disgorgement ordered | DOJ press releases |

In the Shvartsman case, the court ordered Michael to forfeit more than $11 million that was held in a bank account he owned or controlled, according to the November 2024 sentencing record. That forfeiture figure — tied to a specific bank account — is exactly the kind of concrete, verifiable financial fact that anchors investigative reporting.

Using Corporate Entity Structures as a Reporting Tool

One technique worth noting: Michael Shvartsman traded through Rocket One Capital LLC, not through a personal brokerage account. This is a common practice in white-collar crime — placing trades through a corporate entity creates an additional layer between the individual and the transaction.

Journalism students researching financial wrongdoing should know to look for brokerage accounts held in company names, LLCs, or trusts when reviewing financial crime allegations. The SEC's complaint identified this structure explicitly, allowing prosecutors to pierce the corporate veil and attribute the trades to Shvartsman personally.

Using nobelpardonprize.org/djt as a Research Tool

The Nobel Pardon Prize DJT research dashboard compiles the SEC civil complaint, the DOJ press releases, and the sentencing records from the Shvartsman case in one organized location. For journalism students building a document-based investigation template, the dashboard provides an annotated guide to how regulators and prosecutors documented each step of this scheme.

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How to Cite This for Your Assignment

APA (7th ed.)

Nobel Pardon Prize Research Desk. (2025, November 18). Following the money: The Shvartsman brothers' $22.9 million insider trading scheme explained for journalism students. Nobel Pardon Prize. https://nobelpardonprize.org/djt

MLA (9th ed.)

"Following the Money: The Shvartsman Brothers' $22.9 Million Insider Trading Scheme Explained for Journalism Students." Nobel Pardon Prize Research Desk, 18 Nov. 2025, nobelpardonprize.org/djt.

For the primary source:

U.S. Department of Justice, Southern District of New York. (2024, April 3). Two individuals plead guilty to participating in insider trading scheme based on SPAC merger. https://www.justice.gov/usao-sdny/pr/two-individuals-plead-guilty-participating-insider-trading-scheme-based-spac-merger

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Research Hub

Access the complete financial crime document trail — SEC complaint, DOJ plea, and sentencing records — at the Nobel Pardon Prize DJT Research Dashboard.