The co-founders, Andy Litinsky and Wes Moss, of former president Donald Trump’s media company filed a lawsuit Wednesday, claiming that Trump and other leaders had schemed to deprive them of a stake in the company that could be worth hundreds of millions of dollars.
Andy Litinsky and Wes Moss
“It’s not like they went out and bought a lottery ticket,” Christopher Clark, the lawyer for UAV in the partnership’s Delaware lawsuit against TMTG said of the co-founders. “They actually went out and did the work, they created Truth Social, and now the beneficiary of that, Donald Trump, doesn’t want to pay.”
“Not a unique story, unfortunately,” Clark said, referring to Trump’s infamous practice of contesting bills from contractors and lawyers.
The case could complicate a long-delayed bid by Trump Media & Technology Group, owner of the social network Truth Social, to merge with a special purpose acquisition company called Digital World Acquisition and become a publicly traded company.
That merger deal, which could value Trump’s stake in the company at more than $3 billion, would offer the former president a financial lifeline at a time when he is facing more than $454 million in penalties from a civil fraud judgment this month in New York. The case is one of three lawsuits filed this week that detail bitter recriminations among people key to the Trump company’s earliest days. The filings will probably serve as the opening salvo in what could be all-out legal warfare ahead of the March 22 shareholder vote on whether to go ahead with the merger.
Fun Fact: Litinsky and Moss were contestants on Trump’s television show “The Apprentice.”
“Former President Donald J. Trump … is causing TMTG to not only dispute UAV’s established right to 8,600,000 shares or 8.6% of TMTG’s issued and outstanding stock, but also attempting to drastically dilute UAV’s interests in connection with an impending merger,” a motion in the Delaware suit says. That motion claims that UAV’s current 8.6% stake in Trump’s company would be diluted to less than 1% as a result of the TMTG board approving an eight-fold increase in the total number of authorized shares in the firm, from 120 million shares to 1 billion shares.
“There is no legitimate business purpose for the Billion Share Authorization or the creation of non-voting stock in the face of the pending Merger, particularly because any unissued TMTG stock will be cancelled in the Merger,” the motion by UAV says.
“The only plausible reason for TMTG to authorize this massive new block of stock and create non-voting stock is so Trump can dilute UAV and take the lion’s share of merger consideration for himself,” the motion says.
While Trump is facing a growing legal bill, he cannot immediately cash out of his shares, if and when the deal closes. Securities laws would prevent him from selling massive amounts of stock all at once, and the deal’s terms tie up his stake for six months — unless Digital World elects to waive the so-called lockup provision. Trump could, however, still transfer the stock into a trust.
