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Now that Trump Media and Technology Group (NASDAQ: DJT) has lost its post-public market debut patina - and that too, quite expeditiously - the former US President is likely looking for an appropriate scapegoat in the form of two former co-founders of his media-focused entity who so happen to have launched a lawsuit of their own.
We recently reported that Trump Media and Technology Group announced via a new filing with the SEC that its Truth Social platform raked in a paltry $4.131 million in revenue in the entire of 2023, incurring a net loss of over $58 million. This disclosure precipitated a fierce selling wave that then took away most of the stock's post-public market debut gains.
Trump Sues Andy Litinsky and Wes Moss for Setting Up Trump Media and Technology Group Improperly
This brings us to the crux of the matter. Trump Media and Technology Group had signed an agreement with United Atlantic Ventures (UAV) - headed by Andy Litinsky and Wes Moss - whereby UAV would assist Trump's media-focused entity in establishing a robust corporate governance structure, launch Truth Social platform, and assist in locating a publicly-traded partner. The duo were also responsible for running the day-to-day operations of Trump Media and Technology Group, at least in the initial phase.
Now, Donald Trump has alleged via a new lawsuit that the duo acted as "faithless fiduciaries" and inflicted severe harm on Trump Media and Technology Group. Specifically, as per the lawsuit's claims, the duo failed to establish an appropriate governance structure, botched the day-to-day operations of the company, and selected a subpar merger candidate in the form of Beneserre Capital Acquisition Corporation, causing substantial harm to the stock price of Trump Media's ultimate merger partner - Digital World.
According to the lawsuit, while negotiating with Trump Media and Technology Group, Beneserre was already pursuing another merger candidate. Consequently, when Trump Media selected Digital World as its partner, the SEC rightly swooped in over improper public disclosures, which then placed the planned merger between the two entities on the proverbial ice for months on end, causing Digital World's stock price to plummet.
Bear in mind that Litinsky and Moss, who know Trump from his days of hosting the reality show “The Apprentice” and take the credit for originally pitching the idea of a tech startup to the former US President, have filed a lawsuit of their own, claiming that their original 8.6 percent stake in Trump Media and Technology Group has been subjected to significant dilution via an “11th hour, pre-merger corporate maneuvering” that has increased the amount of authorized stock from 120 million shares to 1 billion shares. Trump's attorneys, on the other hand, claim that the duo's original services agreement with Trump Media has already been voided, negating their locus standi.
