Federal prosecutors are investigating links between Donald Trump’s fledgling social media network and a former nightclub owner who once sued a police force for claiming his venue was funded by the Russian mob.
Michael Shvartsman, 51, is managing director of Rocket One Capital, a Miami-based company that was an early investor in a vehicle set to merge with Trump Media and Technology Group.
Born in the Ukrainian port city of Odessa, Shvartsman spent most of his youth in Canada, where for a time he helped run a nightclub called Kaos, which came to the attention of the police department. from Edmonton. He is now at the center of one of the most controversial US corporate launches in recent years, a possible future shareholder in an upstart media company set to play an outsized role in the 2024 presidential election.
A federal grand jury in New York last month demanded information about Rocket One from TMTG’s Nasdaq-listed merger partner, Digital World Acquisition Corp, and each of its directors. Shvartsman’s chief strategy officer, Bruce Garelick, was named to DWAC’s board of directors last year, ahead of the company’s IPO.
The Securities and Exchange Commission has been reviewing contact between DWAC executives and people involved with Trump’s media group, according to a person familiar with the investigation.
The agency is responsible for enforcing the rules governing so-called special purpose acquisition companies, which are supposed to be listed on the stock exchange as a cash shell, and then seek a merger target.
Attorneys for the Southern District of New York did not respond to questions about the reasons for their interest in Rocket One, and it is unclear whether they are pursuing an investigation similar to that of the SEC.
Garelick could not be reached for comment. A representative for Shvartsman did not provide comment on the Justice Department subpoenas.
Set up to compete with Twitter and other internet platforms that banned Trump during the January 2021 post-election violence, TMTG has garnered considerable interest from stock market investors. DWAC shares rose from $10 to $94 after the Trump deal was announced, before falling back as potential legal hurdles to the deal mounted.
Both companies are run by executives with right-wing political ties. TMTG chief executive Devin Nunes is a former California congressman who was Trump’s top ally on the House Intelligence Committee. DWAC’s chief financial officer, Luiz Philippe of Orléans-Braganza, is a Brazilian politician aligned with far-right President Jair Bolsonaro.
By contrast, Shvartsman, who invested in the September IPO alongside mainstream investors according to a person familiar with the deal, appears to have no more connection to politics today than he did. in the 1990s, as manager of the Kaos nightclub.
The Edmonton Police Department claimed Kaos was funded by the Russian mob, according to a lawsuit filed by Shvartsman against multiple police officers and the city. The claim was among more than a dozen “false” and “malicious” allegations that the lawsuit said were made by police in communications with their owner, government authorities and the general public.
The lawsuit was dismissed and the plaintiffs were ordered to pay police tens of thousands of dollars in costs, according to a spokeswoman for the force. A lawyer for Shvartsman did not specify the outcome of the case, in which no conclusion was reached as to the veracity of the allegations made public by the police. Shvartsman has never been charged with any crime.
The nightclub closed in 1999, and sometime after that Shvartsman moved to Florida, where he has an eclectic collection of business interests. Companies where he has been involved as an owner or manager include Conquest Financial Services, a provider of credit card machines for small businesses, and Conquest Financial Management Corp, which supplies patio furniture to hotels.
It hasn’t always been easy. In 2019, Shvartsman’s furniture company was sued by JPMorgan Chase over an allegedly unpaid $2 million loan; the case was settled. The previous year, a federal judge ordered the company to pay a Bahamas resort $454,000 after failing to deliver 1,420 lounge chairs. Rocket One Capital, the company that caught the attention of prosecutors, also had a controversial creation. Originally called Foundation Capital, the company changed its name after a California company of the same name sued Shvartsman’s company for trademark infringement. This lawsuit, too, has been settled.
“What started out as a family office turned into a venture capital firm,” Rocket One said on its website, until it was taken off the internet hours after subpoenas to appear have become public. The company said it was looking to invest between $250,000 and $15 million at a time, and its website listed 19 portfolio companies, including Airbnb, which it described as “one of the most innovative companies and most disruptive of the past decade”.
Airbnb said it had no record of an investment from Shvartsman or Rocket One. Shvartsman’s company did not fund Airbnb directly but bought its shares in a secondary market transaction, according to a person who knows him.
Other portfolio companies listed on the Rocket One website have gained less prominence. One of them, Joblio, describes itself as a “transparent, systematized and humanized migrant labor recruitment platform”, offering to connect employers from wealthy economies like Canada with candidates from less wealthy or war-torn countries, including Ukraine and Uzbekistan.
Joblio’s founder is Jon Purizhansky, a New York businessman and longtime associate of Shvartsman who left the Soviet Union as a teenager to build a life in the west. Both men are listed as directors of the company’s UK subsidiary, but Purizhansky – who was barred from the debt collection business and received felony convictions for his role in fraudulently obtaining a US work visa for mechanic from Azerbaijan – told the Financial Times via a spokesperson that Rocket One Capital “is neither an investor [n]or shareholder of Joblio”.
DWAC told investors last month that investigations were likely to delay its merger with TMTG. It’s unclear where that leaves the Trump company’s expected $1 billion proceeds, or the aspirations of investors such as Shvartsman.
But prosecutors’ scrutiny has coincided with a series of personnel changes at Trump’s media company and its potential acquirer. Garelick, the chief strategy officer of Rocket One Capital, resigned from the DWAC board days after the latest batch of subpoenas arrived. And when TMTG filed an updated list of directors with the Florida Companies Registry in June, six of the original names had been removed, including that of the company’s chairman and star attraction Donald Trump.
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