The media company that Donald Trump recently took public is suing its co-founders, accusing them of failing “spectacularly” to get the company off the ground and then trying to “thwart the deal.”
Lawsuit filed in Sarasota County, Florida, civil court seeks to enjoin Trump Media and Technology GroupCo-founders, Wesley Moss and Andrew Litinsky, to appoint members to the company’s board of directors – or to own any of its shares.
Moss and Litinsky say a 2021 deal Trump signed with a company they founded, United Atlantic Ventures, LLC, guarantees them an 8.6% share of Trump Media’s total stock, undiluted by issue of new shares.
At DJT’s closing price on Tuesday, that stock would be worth about $601 million.
In February, Moss and Litinsky sued Trump Media in Delaware Chancery Court over their stake in the company.
The complaint, made public Tuesday, was filed in late March, around the same time shareholders of the shell company Digital World Acquisition Corp. voted to approve a merger with Trump Media, a private company behind the newly launched social media app Truth Social.
Following the special purpose merger, shares of the newly public company Trump Media began trading under the symbol DJT and soared as much as 50% in its Nasdaq debut last week.
But the stock price fell sharply on Monday, after the company revealed a net loss of $58.2 million in 2023.
Trump Media’s lawsuit, filed in Florida, wants the court to award it damages for what it claims were “breaches of fiduciary duty” by Moss and Litinsky.
In addition to Moss and Litinsky, the lawsuit names DWAC founder Patrick Orlando as a co-defendant, accusing him of being involved in the violations.
According to the Florida lawsuit, Moss and Litinsky were responsible for establishing Trump Media’s corporate governance structure, preparing to launch Truth Social and finding a shell company for a merger to make the public media company, the lawsuit says.
Moss and Litinsky failed “at every turn,” Trump Media claims of the two men, both former contestants on Trump’s reality TV show “The Apprentice.”
They made “unnecessary decisions” that caused “significant damage” to Trump Media and a decline in DWAC’s stock price, the company claims. And they chose to pursue a merger with Benessere Capital Acquisition Corp. of Orlando, despite a business dispute with DWAC that ultimately triggered a Securities and Exchange Commission investigation, according to the lawsuit.
Moss and Litinsky then “decided to fight back” on the eve of the vote on the Trump Media-DWAC merger by suing the soon-to-be public company, according to the lawsuit first reported by Bloomberg.
Trump Media calls the claim that drones owe inventory “baseless” and says the services agreement Trump signed with drones in 2021 is no longer valid.
According to the lawsuit, after Trump’s representatives expressed concerns about the deal in July 2021, Eric Trump sent UAV a letter saying his father had “regarded” the deal as “void.” UAV reportedly “acquiesced” to the elder Trump’s decision to cancel the contract.
Lawyers for Trump Media did not immediately respond to CNBC’s request for comment on the lawsuit. Litinsky and Moss could not immediately be contacted.
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