The media company recently taken public by Donald Trump is filing a lawsuit against its co-founders, alleging that they failed “spectacularly” in launching the company and subsequently attempted to “thwart the deal.” The lawsuit, filed in Sarasota County, Florida, civil court, aims to prevent Trump Media & Technology Group co-founders Wesley Moss and Andrew Litinsky from appointing members to the company’s board or owning any of its shares.
Moss and Litinsky assert that a 2021 agreement, which Donald Trump signed with a company they established, United Atlantic Ventures, LLC, entitles them to an 8.6% share of Trump Media’s total stock, without being diluted by the issuance of new shares. Based on DJT’s closing price on Tuesday, this share would be valued at approximately $601 million. In February, Moss and Litinsky initiated a lawsuit against Trump Media in the Delaware Chancery Court concerning their ownership stake in the company.
The lawsuit in Florida was initiated in late March, coinciding with the time when shareholders of the shell company Digital World Acquisition Corp. voted to endorse a merger with Trump Media, the private entity responsible for the emerging social media app, Truth Social. After the completion of this special purpose merger, the stock of the newly public Trump Media started trading under the ticker symbol DJT and surged by as much as 50% during its Nasdaq debut last week. However, the share price experienced a significant drop on Monday following the company’s announcement of a $58.2 million net loss in 2023.
Trump Media’s lawsuit seeks damages for what it alleges are “breaches of fiduciary duty” by Moss and Litinsky. Alongside Moss and Litinsky, the lawsuit also names DWAC founder Patrick Orlando as a co-defendant, claiming his involvement in these breaches. According to the lawsuit, Moss and Litinsky were tasked with establishing Trump Media’s corporate governance structure, orchestrating the launch of Truth Social, and identifying a shell company for a merger to transition the media company to a public entity.
However, the duo, both previous contestants on Donald Trump’s former reality TV show “The Apprentice,” allegedly fell short “at every juncture,” as per Trump Media’s claims. The company asserts that their “wasteful decisions” led to “substantial harm” to Trump Media and a decrease in DWAC’s stock price. Additionally, the lawsuit states that they opted to pursue a merger with Orlando’s Benessere Capital Acquisition Corp., despite a business conflict with DWAC, which subsequently prompted an investigation by the Securities and Exchange Commission.
Moss and Litinsky allegedly chose to “retaliate” on the eve of the Trump Media-DWAC merger vote by filing a lawsuit against the soon-to-be-public company, as stated in the suit initially reported by Bloomberg. Trump Media dismisses the claim that UAV is entitled to stock as “baseless” and asserts that the service agreement Donald Trump signed with UAV in 2021 is now invalid.
The lawsuit states that in July 2021, after Trump’s representatives expressed concerns about the agreement, Eric Trump sent a letter to UAV stating that his father had “deemed” the agreement to be “void.” UAV purportedly agreed to the senior Trump’s decision to nullify the contract. Attorneys for Trump Media did not respond immediately to CNBC’s request for comment on the lawsuit. Litinsky and Moss were not immediately reachable for comment.
