Trump Sues Truth Social Company Co-Founders to Zero Them Out

04/03/2024 03:42

(Bloomberg) -- Donald Trump has sued two co-founders of his newly public Trump Media & Technology Group Corp., claiming they set the company up improperly and shouldn’t get any stock in it. Most Read from BloombergA Million Simulations, One Verdict for US Economy: Debt Danger AheadTrump Media’s Business Doesn’t MatterTrump Got His $175 Million Bond From a Billionaire Fan’s CompanyIran Vows to Punish Israel for Strike on Embassy in SyriaTesla Disappoints Analysts by Most Ever in Brutal Blow for E

(Bloomberg) -- Donald Trump has sued two co-founders of his newly public Trump Media & Technology Group Corp., claiming they set the company up improperly and shouldn’t get any stock in it.

Most Read from Bloomberg

In the latest legal skirmish over who gets how much of the hot but flailing meme stock, Trump alleges that Andy Litinsky and Wes Moss violated an agreement about the setup and don’t deserve their 8.6% stake, currently valued at $606 million.

The lawsuit, which was filed on March 24 in Florida state court and hasn’t previously been reported, comes after the pair brought their own suit against the former president in Delaware Chancery Court over their promised stake in the the social media company.

The legal fight is playing out amid wild swings in shares of Trump Media, which began trading last week after it merged with a special purpose acquisition company, known as a SPAC. The stock dropped 21% Monday after Trump Media disclosed in a securities filing a $58 million loss and a relative trickle of revenue for 2023, and reiterated a warning that it needed the money from the SPAC deal to keep operating.

The stock was up 6.1% at $51.63 at 3:53 p.m. in New York on Tuesday.

Trump claims Litinsky and Moss failed to properly set up the corporate governance structure of Trump Media, launch his Truth Social platform and find an appropriate merger partner. That failure hurt the company, he argues. He says they then “began ceaseless attempts to thwart” the blank check deal in the struggle for their respective stakes. In their own suit, the two say Trump was planning to seek millions of extra shares, diluting their stake.

Lawyers for Litinsky and Moss didn’t return emails seeking comment on Trump’s suit.

Read More: Trump’s Net Worth Drops $1 Billion as Social Media Firm Sinks

Trump, the presumed Republican nominee in November’s presidential election, has seen his net worth soar due to his Trump Media stake, which he could ultimately use to pay off hundreds of millions of dollars in legal judgments against him — though he is currently unable to sell those shares for six months due to a lockup. Even with its slump, Trump Media currently has a market capitalization of $7.05 billion, and the larger his piece of it, the more money he could get. If the shares spiral, his payout would shrink.

Trump owns 57% of the company, according to the filings with the US Securities and Exchange Commission, with his stake now worth $4.02 billion on paper.

Read More: Keeping Up With the Trump Trials

The Delaware judge, Sam Glasscock III, declined to fast-track Litinsky and Moss’s suit after Trump’s lawyers agreed to avoid lessening the value of their shares. But at a hearing Monday the pair told the judge they plan to seek an order barring the Florida suit from going forward while they litigate claims that Trump planned to target their stake all along.

The judge said he was “gobsmacked” to learn of Trump’s Florida suit — which he filed instead of bringing counterclaims against the two in Glasscock’s own courtroom — and would consider possible sanctions against the former president in the Delaware case.

The Florida case is Trump Media & Technology Group v. United Atlantic Ventures, Florida Circuit Court, 12th Judicial Circuit (Sarasota).

--With assistance from Bailey Lipschultz.

(Adds current value of stake held by Litinsky and Moss in second paragraph and stock action in fifth.)