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The co-founders of Trump Media & Technology Group have sued the company, alleging that executives including Donald Trump are manoeuvring to dilute their stake in the business through a “last-minute stock grab” as the former US president’s legal bills stack up.
The existence of the case was revealed in a Delaware Chancery Court filing from United Atlantic Ventures, a partnership set up by Andy Litinsky and Wes Moss, two former contestants of reality television show The Apprentice, on Wednesday. They are seeking to speed up proceedings as TMTG moves towards a stock market listing through a merger with blank-cheque company Digital World Acquisition Corporation.
The case could throw another spanner in the works for TMTG’s public listing. Earlier this month it received approval from the Securities and Exchange Commission to merge with DWAC after a more than two-year delay.
TMTG’s public listing is expected to provide a multibillion-dollar windfall for Trump, who faces nearly a half-billion dollars in penalties after a civil fraud trial involving his real estate empire.
UAV, which has an 8.6 per cent stake in TMTG, is protesting what it refers to as a “wrongful 11th hour” plan by the company to increase its share count from 120mn to 1bn. The move would dilute UAV’s ownership for “no legitimate purpose”, according to the filing.
The filing also highlights a lock-up agreement between Trump and DWAC that allows the former president to transfer his stock to family members or a trust.
“This is particularly alarming given the over $500 million in civil judgments Trump owes judgment creditors, who are at his door,” it states. “Indeed, the merger represents a potential (and perhaps existential) liquidity event for Trump, which may explain his last-minute stock grab.”
DWAC announced a deal to merge with TMTG, which operates the Truth Social platform, in October 2021. However, the path to a public listing has been fraught, including an investigation by regulators over whether the blank-cheque company broke securities laws by holding talks with Trump’s company before its listing. DWAC agreed to pay $18mn to settle the regulatory probe.
Last year, Bruce Garelick, who sat on DWAC’s board of directors, was arrested along with brothers Michael and Gerald Shvartsman, on insider trading charges brought by federal prosecutors in Manhattan. They have all pleaded not guilty.
According to the court filing, Litinsky and Moss approached Trump after he lost the 2020 presidential election with the idea of launching TMTG.
Truth Social — which competes with the likes of Elon Musk’s X — was described as “a social media platform aiming to disrupt big tech’s control on free speech”, according to a presentation from December 2023.
Under the terms of the agreement, UAV received an 8.6 per cent equity stake in the business. Meanwhile, Trump took 90 per cent and his former lawyer Bradford Cohen, who was also a contestant on The Apprentice, received 1.4 per cent.
Trump’s stake in TMTG was worth approximately $3.2bn and could provide a financial lifeline for the Republican presidential candidate, the filing said.
UAV is represented by Christopher Clark, whose clients include Musk and Hunter Biden. TMTG did not respond to a request for comment.