An estimated $4 billion business merger involving former President Donald Trump’s social media company could hit a major snarl after a lawsuit was filed Wednesday accusing Trump of trying to dilute the co-founders’ shares.
Andy Litinsky and Wes Moss, who co-founded Trump’s Truth Social platform, filed a lawsuit in Delaware claiming their previously negotiated 8.6% stake in Trump Media & Technology Group (TMTG ) has been watered down to less than 1%, The Washington Post and CNBC reported.
The dispute comes as TMTG eyes a merger with the publicly traded shell company Digital World Acquisition Corp. The sale, which Digital World’s shareholders are scheduled to vote on next month, is estimated to be worth as much as $4 billion, according to The New York Times.
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“The attempt here is to deprive them of the deal,” attorney Christopher J. Clark, who is representing Litinsky and Moss’ partnership, United Atlantic Ventures (UAV), in the complaint, told CNBC News. “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.”
Clark and representatives of Trump, Digital World and TMTG did not immediately respond to HuffPost’s request for comment on Thursday.
Under UAV’s previously reached agreement, Trump would receive 78 million shares that are worth about $3.5 billion at today’s share price value. UAV would receive more than 7 million shares, equating to roughly $339 million, according to The Washington Post’s review of a court motion requesting expedited proceedings in the case.
Digital World appeared to recognize that previous deal with UAV in an Securities and Exchange Commission filing earlier this month but said that the agreement was declared void by a Trump attorney more than two years ago.
The sale of any stock could come as a major financial lifeline to Trump, who has faced numerous legal judgments against him since leaving the Oval Office, including an order earlier this month to pay $355 million, plus interest, for committing business fraud in New York state.
An appeals court judge on Wednesday denied Trump’s request to pause that judgment’s enforcement. Trump, currently the front-runner for the Republican presidential nomination, argued that he doesn’t have the cash to cover the penalty.
This isn’t the first time that a founder of Trump’s Truth Social platform has spoken out against him while alleging misconduct, particularly involving stocks.
Will Wilkerson, who helped found TMTG but was then fired after speaking out about alleged security law violations, alleged in 2022 that Trump asked Litinsky to relinquish his stock in the company to his wife, Melania Trump. Wilkerson also said that Trump’s sons Donald Trump Jr. and Eric Trump requested a financial stake in the social media platform despite having never worked for the company.
“They were coming in and asking for a handout,” Wilkerson told The Washington Post. “They had no bearing in this company … and they were taking equity away from hard-working individuals.”