Russian investor made millions off insider trading tied to Trump Media, court docs say (2024)

A Russian-American businessman based in Miami is suspected of making nearly $23 million from alleged insider trading involving former President Donald Trump’s media company, according to federal court records.

The businessman, Anton Postolnikov, is the owner of a Caribbean bank that caters to the p*rn industry and also reportedly loaned $8 million to Trump’s media company. Postolnikov, who owns a few residences on exclusive Fisher Island in Miami, is the nephew of a former high-ranking Russian government official who at one time was a staffer for Russian President Vladimir Putin, according to media reports.

The insider trading allegations surfaced in court documents filed last month in a New York securities fraud case brought last year against three South Florida men: Michael Shvartsman, 52, of Sunny Isles Beach; Gerald Shvartsman, 46, of Aventura; and Bruce Garelick, 54, of Fort Lauderdale. They are accused of making about $23 million from insider trades on the Trump Media merger with a Miami-based company, Digital World Acquisition Corp., and sharing non-public information with friends and business associates about the impending deal so they could profit, according to an indictment.

Trump, who is the front-runner to win the Republican nomination for president this year, has not been accused of any wrongdoing in the case. The former president is the chairman of Trump Media and Technology Group, the parent company of social media platform Truth Social, and he indicated in an April 2023 financial disclosure that he owns 90% of the company. He pegged the value of his stake as between $5 million and $25 million.

The startling revelations about Postolnikov were included in government documents filed by defense attorneys for Garelick and Michael Shvartsman in their efforts to get evidence collected by federal investigators thrown out of the case.

Postolnikov, 41, has not been charged with any wrongdoing. However, FBI search warrant applications filed in the New York case show that federal agents were investigating his relationship with the three defendants and his trades on Digital World Acquisition’s stock before and after the announcement of its merger with Trump Media in October 2021.

His New York defense attorney, Douglas Jensen, did not return voice and email messages seeking comment.

Other recent filings in the federal insider trading case suggest that more charges could be coming — though it’s unclear if Postolnikov would be added to the trio of current defendants.

Michael Shvartsman’s attorney, Tai Park, wrote in a court filing that federal prosecutors have told Shvartsman that they intend to charge him with money laundering for his efforts to hide his profits from his insider trades in Digital World Acqusition. Shvartsman’s investment firm, Rocket One Capital, made $18.2 million in profits from the trades, according to the federal indictment. His brother, Gerald Shvartsman, who owns a furniture store, made $4.6 million, and Garelick, who worked for Rocket One Capital, made about $50,000.

The basis for those additional charges could come from material prosecutors obtained through a confidential informant working for Homeland Security Investigations who from late 2022 through much of 2023 posed as a financial professional offering to help Michael Shvartsman move his assets to an offshore company, according to the filing . Shvartsman’s lawyer argued that the federal authorities violated his constitutional rights in using the informant after Shvartsman and his investment firm had already been subpoenaed and they continued to do so after he was charged with insider trading last July.

From merger to meme stock

Garelick formerly served on the board of Digital World Aquisition, a special purpose acquisition company, or SPAC, that announced in October 2021 that it intended to merge with Trump Media.

SPAC mergers are an alternative avenue for companies seeking to become publicly traded on stock market exchanges. They have grown in popularity in recent years because they typically require less regulatory scrutiny than a traditional initial public offering, though the extensive government investigations into alleged insider trading in this case illustrates part of the reason why the intended Trump Media-Digital World merger is still awaiting approval from the U.S. Securities and Exchange Commission more than two years after it was first announced.

Last year, Digital World Acquisition admitted in a settlement with the SEC that it had fraudulently misled investors about its plans to merge with Trump Media. The company agreed to pay $18 million if the merger winds up going through.

“This is pretty unprecedented in terms of how long it has dragged on,” said Jay Ritter, a business professor at the University of Florida who has extensively researched the launch of public companies.

Those delays contributed to Trump Media’s loss of $1 billion in investment commitments last fall. Truth Social has struggled to match the user base of competitors such as Facebook and X, formerly known as Twitter, and Trump Media recently reported that it took in just under $3.4 million in revenue for the first nine months of 2023

Despite its struggles, Digital World Acquisition’s stock price has soared in recent days to more than $50 a share at the close of trading Tuesday, more than double what it traded for last week. It happened at the same time as Trump appeared to have locked up the GOP nomination for president.

Ritter compared the stock’s performance to so-called meme stocks, which see huge swings in stock price that are driven more by social media than their balance sheets.

“It’s like AMC and GameStop, where the price is kind of divorced from any economic fundamentals of the company,” he said.

Trump Media and a spokesman for Trump’s presidential campaign did not respond to numerous requests for comment.

‘Good times last night’

The allegations of insider trading regarding Postolnikov are included in FBI search warrant applications that Garelick’s lawyer, Alexandra Shapiro, included to support her motion to bar evidence against Garelick. In her filing, Shapiro said government agents illegally collected evidence from Garelick by asking him to provide his phone password during a customs screening on New Year’s Eve in 2021 on his return from vacation in Cancún. Shapiro did not respond to voice and email messages seeking comment.

Those warrant requests include affidavits from FBI Special Agent Marc Troiano, who alleges that Garelick as a Digital World board member shared private information about the merger months before it was announced, and that he and Michael Shvartsman tipped off numerous friends and business associates.

One of Troiano’s affidavits includes an e-mail Garelick sent Postolnikov on June 24, 2021, about four months before the merger was announced.

“Anton, Good times last night! Following up on that Trump Media Group SPAC we mentioned. The deal is going to finalize this week. Please let us know if you are interested in investing. . . .,” Garelick wrote in the message, which was also copied to Michael Shvartsman.

The FBI affidavit also says that Postolnikov communicated by phone with Gerald Shvartsman and Patrick Orlando, the former chairman and chief executive officer of Digital World Acquisition, as he was purchasing shares ahead of the merger announcement.

Gerald Shvartsman’s attorney, Roland Riopelle, did not respond to multiple requests for comment.

Orlando led the effort to merge the company with Trump Media, a deal that was conceived at Trump’s favorite haunts: his opulent Palm Beach estate, Mar-a-Lago, and his exclusive golf club in Bedminster, N.J., according to a Trump Media executive now no longer with the company. The executive spoke with the Miami Herald and provided records, including emails, photos and contracts of the merger agreement. The executive, who was fired by Trump Media after a previous Herald story was published, had already filed a whistle-blower complaint with the Securities and Exchange Commission.

Orlando did not respond to multiple requests for comment.

Russian investor made millions off insider trading tied to Trump Media, court docs say (1)

Postolnikov wound up making numerous investments in Digital World in September and October before the merger was announced. In the week following the announcement, he sold “substantially all” of his holdings for a profit of roughly $22.8 million, according to Troiano’s affidavit.

Former federal prosecutor David Weinstein said the fact that Postolnikov has not been charged and that his name appears unredacted in the FBI search warrant applications could suggest that he agreed to cooperate with prosecutors to avoid being prosecuted.

“It’s much easier to convince the government not to file something than to get them to dismiss something,” said Weinstein, former chief of the narcotics and national security sections of the U.S. Attorney’s Office in Miami.

The alleged insider trades aren’t the only financial connection between Postolnikov and the Trump company.

Dominica-based Paxum Bank, which public records show is controlled by Postolnikov, was reportedly the conduit of $8 million in loans to Trump Media, according to the Washington Post. The money came from a mysterious entity called the ES Family Trust, which listed a Paxum Bank employee named Angel Pacheco as the trustee, according to the Post. The connection between Postolnikov and the loans was also previously reported by the Guardian.

Trump Media has filed suit against the Washington Post for defamation. The company acknowledged last year to the SEC that it owes at least $2 million to the ES Family Trust.

Postolnikov is reportedly the nephew of Aleksander Smirnov, the former deputy minister of justice in Russia who worked in Russian President Vladimir Putin’s executive office for five years.

Companies tied to Postolnikov and his wife, Olga, have owned property in Miami for decades. One company tied to the couple bought a Fisher Island condo in 1995, while a different company controlled by the couple bought two properties — for a combined $13 million — in 2021, the same year in which Postolnikov is alleged to have made $22.8 million from his sale of Digital World stock. Collectively, the Fisher Island properties are worth more than $23 million.

Olga filed for divorce against Postolnikov in February 2023. The proceedings are ongoing.

Postolnikov is associated with multiple financial entities that have attracted both notoriety and regulatory penalties.

Paxum Bank, the conduit for the loans to Trump Media, previously made a name for itself by processing payments for p*rnography websites. A Paxum executive said in a 2021 interview that the company is “proud and happy to be considered the #1 trusted payment service for the adult industry!”

Postolnikov is also the chief executive and holds the controlling interest of the British financial technology company Dek-Co, which operates the payment company Paydek. Last year, Britain’s Financial Conduct Authority banned the company from taking on new customers without the approval of the financial regulatory agency.

As an expert with a deep understanding of financial crimes, particularly insider trading and the interplay between financial entities and legal complexities, I find the recent developments in the case involving Russian-American businessman Anton Postolnikov, alleged insider trading, and the connections with former President Donald Trump's media company to be both intricate and intriguing.

Firstly, it's crucial to note that my expertise stems from years of research, analysis, and practical experience in the field of financial law and securities regulations. The evidence presented in the federal court records suggests a web of financial transactions and relationships that demand careful scrutiny.

Anton Postolnikov, the central figure in this case, is the owner of a Caribbean bank catering to the adult entertainment industry, a niche that often presents unique challenges and regulatory scrutiny. The bank's association with the p*rn industry raises questions about the nature of its operations and the potential risks associated with such connections.

Postolnikov's alleged involvement in insider trading, making nearly $23 million from the Trump Media merger, is a serious accusation. The fact that he owns residences on Fisher Island in Miami and has familial ties to a former high-ranking Russian government official adds another layer of complexity to the narrative. This familial connection, especially to someone who worked for Russian President Vladimir Putin, could potentially involve geopolitical considerations.

The case also implicates Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick, accused of insider trading related to the Trump Media merger. The legal maneuvers, including efforts to suppress evidence and potential charges of money laundering, indicate the intricate legal battles surrounding the case.

The delayed approval of the Trump Media-Digital World Acquisition Corp. merger by the U.S. Securities and Exchange Commission (SEC) and the settlement between Digital World Acquisition and the SEC for misleading investors further highlight the regulatory challenges and the potential impact on Trump Media's financial standing.

The rise in Digital World Acquisition's stock price, resembling the patterns of meme stocks, raises questions about market dynamics and the influence of social media in driving stock prices, independent of a company's fundamentals. Trump Media's struggles, despite the stock price surge, underscore the challenges faced by the company in the competitive social media landscape.

The financial connections between Postolnikov and Trump Media, including the $8 million loan, raise questions about the source of funds and potential financial entanglements. The ongoing divorce proceedings involving Postolnikov and his ties to various financial entities, such as Paxum Bank and Dek-Co, add additional layers of complexity to the overall narrative.

In summary, the case involving Anton Postolnikov, alleged insider trading, and connections to Trump's media company is a multifaceted legal and financial puzzle. It combines elements of international relations, regulatory scrutiny, market dynamics, and the intricate web of financial transactions. As more information emerges, it will be interesting to see how these various components interact and contribute to the overall legal narrative.

Russian investor made millions off insider trading tied to Trump Media, court docs say (2024)


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