Donald Trump, the Republican presidential candidate, is suing two co-founders of Trump Media and Technology Group (TMTG), the parent company of his Truth Social network, alleging that they set up the company improperly and should lose their stock in the venture. The lawsuit, filed on March 24 in a Florida court, targets Andy Litinsky and Wes Moss, two former contestants from Trump's NBC reality show "The Apprentice" who became co-founders of TMTG.
The lawsuit comes just days after TMTG went public on the Nasdaq exchange, enjoying a remarkable debut with shares trading at a high of $78 before plunging days later as the company's extraordinary 2023 losses came to light. Some have warned that TMTG is the latest example of a volatile "meme stock" offering with little underlying value.
In the lawsuit, Trump accuses Litinsky and Moss of "spectacularly" mishandling an attempt to take TMTG public several years ago and subsequently attempting to "thwart the deal," allegedly putting the whole project "on ice" for more than a year and a half. The Republican further claims that his collaborators failed "at every turn," made "wasteful decisions," and caused "significant damage" to TMTG's prospects.
Trump's suit also targets the pair over a Delaware filing they made in February, in which they sought to prevent Trump from taking steps that would sharply reduce their combined 8.6% stake in TMTG, which they own through a 2021 agreement Trump signed with their company United Atlantic Ventures. Trump argues that the Delaware filing is one of several attempts they have made to block TMTG's ultimately successful plan to go public, which was accomplished last month by merging it with a publicly-traded shell company called Digital World Acquisition.
In the lawsuit, Trump seeks damages after accusing Litinsky, Moss, and co-defendant Patrick Orlando of "breaches of fiduciary duty." He is also seeking to bar them from owning shares or appointing any members to the company's board.
According to a recent Securities and Exchange Commission filing, Litinsky and Moss's company owns 5.5% of Trump Media - totaling 7,525,000 shares - which are currently worth approximately $388 million. Trump Media has asked the Florida court to force the co-founders to forfeit these shares, declare that they have no right to appoint members to the company's board, and award damages for their alleged breach of their fiduciary duty.
Shares in TMTG have continued to fluctuate wildly since its Wall Street debut last Thursday. On Tuesday, the stock closed at $51.60, up 6% from Monday's outcome, leaving the company as a whole valued at around $5.9 billion. Trump's stake in the company is currently worth more than $4 billion.
As matters stand, Trump must wait six months before selling off his lucrative interest in TMTG, but he may well be tempted to try to make that happen sooner, given the huge legal expenses he is racking up. Trump is currently fighting four criminal indictments and 88 felony charges in four jurisdictions in tandem with his presidential run. His numerous court cases were reported to have cost him $230,000 a day in February, and he was also recently forced to place bonds worth $91.6 million and $175 million in order to appeal two separate New York civil judgments against him.
