Trump media insider trading trial begins with co-founder’s testimony, ‘I was never paid’

Garelick is accused of sharing non-public material information about a planned merger by shell company, Digital World Acquisition Corp. in 2021 with his boss, Florida venture capitalist Michael Shvartsman, and Gerald.

The three men were accused of buying DWAC stock before the merger was announced based on non-public information, then selling the shares after the price rose after the deal with Trump was announced in October 2021.

“Now, whatever your opinion of the former president, he makes a big splash in the news,” Assistant U.S. Attorney Elizabeth Hanft told the 12-member jury in her opening statement.

Garelick was on DWAC’s board of directors in the months before the merger was announced. Thus, they were prevented from sharing material non-public information about the company that could be used by others to buy shares and take advantage of the price increase after the information became public.

“What did the defendant do? Exactly what he was not allowed to do,” Hanft said.

The prosecutor said that although Garelick allegedly made only $50,000 in illegal profits from his DWAC trades, Michael Shvartsman made $18 million, Gerald Shvartsman made $5 million, and others who received information as a result of Garelick’s alleged tactics. It was granted, they also earned money.

Garelick’s attorney, Jonathan Bach, told a completely different story about his client in his opening statement.

“Bruce Gaelic is innocent,” Bach said. “He was not involved in insider trading. He committed no crimes. Bruce is an honest, moral person.”

“He never told anyone, not anyone, about what he learned as a board member at DWAC,” the lawyer said.

Bach said that Garelick bought some DWAC shares, but when he started receiving information that could affect the stock price if the news became public, he stopped buying its stock.

“He followed the rules,” said Bach, who argued that it was “silly” to suggest that Garelick was willing to waste decades of work in the investment field by engaging in illegal trading for such a small amount of personal gain. .

Defense attorneys also sought to distinguish between Garelick, who lived and worked in Providence, Rhode Island in 2021, and Michael Shvartsman, who lived and worked in the Miami area.

Garelik “was in many ways an outsider” in Shvartsman’s business and social circles, Bach said.

Bach said, “You will never see any evidence at all that Bruce tipped anyone. Because he didn’t. Bruce was not a tipper.” “You’ll see evidence that others suggested it.”

Bach also pointed to the nature of Michael Shvartsman’s circle, saying that they were “made up of people who behaved with each other in a very unusual way.”

Twice during his opening statements, Bach suggested to jurors that their verdict would depend on the question of Garelick’s “mental state” at the time of the crime that prosecutors claim was criminal.

Gerelich, Bach argued, “acted in good faith at all times.”

Assistant US Attorney Matthew Shahabian then called Litinsky as a witness.

Litinsky was a contestant on Trump’s NBC reality television show “The Apprentice” years before he and his intern “roommate” Wes Moss pitched Trump the idea of ​​starting a company, Trump Media, which would include a social media app.

In his testimony, Litinsky detailed the events that led to Trump Media’s merger agreement with DWAC.

Shahabian repeatedly asked Litinsky to describe the confidentiality agreements in the letters of intent that Trump Media had signed with two potential merger partners, DWAC and Bennacer.I Capital Acquisition Corp. The agreements specifically barred the parties from sharing information about a potential deal without outsiders.

“Did you share information with outsiders”? Shahabian asked Litinsky.

“No, I didn’t,” Litinsky replied. “It is confidential and it would be against the rules to do so.”

When asked if he traded stock based on confidential information, Litinsky also replied, “No,” adding, “That would be against the rules.”

The purpose of the prosecutor’s question was to emphasize to jurors the rules Garelick is accused of breaking.

Under questioning by Bach, Litinsky revealed how capricious and demanding Trump could be in the months leading up to the agreement in late October 2021 to merge Trump Media with DWAC.

Bach seemed to be trying to convince jurors of the idea that any potential deal with Trump is often just that – potential – because the former president has a history of shying away from deals.

Litinsky detailed how precarious that business can be. “I have never been paid by Trump Media,” Litinsky testified. The testimony came from Litinsky, who was forced out of Trump Media late last month before the completion of the merger that left Trump Media publicly traded.

“It’s been three and a half years, so they never stopped paying me,” Litinsky told Bach when the lawyer asked whether Trump Media, which owns the Truth Social app, had used his services in helping arrange the deal. Have stopped paying them. Merger.

Bach also asked Litinsky, “At one time he [Trump] Demand that you transfer all your equity [in Trump Media] To his wife Melania?”

“Yes, that’s what happened,” Litinsky replied.

Bach then asked: “And he threatened to destroy the deal if you did not make that transaction?”

Litinsky did not get an answer to that question after a prosecutor objected, and apparently the objection was sustained by Judge Lewis Lyman after a sidebar conference with lawyers.

Litinsky testified that in the original deal to co-found Trump Media, he and Moss were to get a 10% stake in the private company, with Trump getting the remaining 90%.

But “former President Trump forced us to pay our lawyers in the deal,” leaving Moss and Litinsky “a little less, 8.6%,” Litinsky testified.

At Trump Media’s current trading value, that stake would still be worth hundreds of millions of dollars.

But in a separate court case, Donald Trump is arguing that Litinsky and Moss are not entitled to any of their promised shares.

Litinsky also testified that although Trump Media originally had serious talks about a merger with Benessere in 2021, Donald Trump then turned to negotiations with DWAC. Both companies were led by Patrick Orlando.

When Bach asked Litinsky whether he wanted to make a deal with Benessere rather than DWAC, the witness responded, “I completely agree with that.”

Litinsky also said that while he was exploring the possibility of merging with DWAC, Trump was also discussing partnerships with other entities. These included right-wing social media companies Getter and Parler.

Bach also said that Litinsky was concerned in August 2021, two months before the merger was announced, that his position at Trump Media was in danger.

Bach asked Litinsky, “You’re starting to hear that Trump’s lawyers and others in New York are starting to demonize your relationship with Trump,” who responded, “I agree with that, but it’s very complicated. Is.”

Litinsky said, there was some conflict with “the Trump Organization or the Trump family” regarding the merger talks.

In addition to the internal drama, Litinsky revealed new details about how Trump Media and Technology Group got its name.

He testified that the company was originally called Trump Media Group, or TMG. But shortly before the DWAC merger was announced, after learning that a comedy group owned the rights to the business name TMG, it changed its formal name to Trump Media & Technology Group.

“We thought the risk of going into a fight with a comedy group was too great,” Litinsky said.