Trump Media co-founders Andy Litinsky, Wes Moss sue to keep stake in company

The co-founders of former President Donald Trump's media company filed a lawsuit Wednesday, claiming Trump and other leaders conspired to deprive them of a stake in the company that could be worth millions of dollars.

The case could complicate a long-delayed bid by Trump Media & Technology Group, owner of social network Truth Social, to merge with a special purpose acquisition company called Digital World Acquisition and become a publicly traded company.

That merger deal, which could value Trump's stake in the company at more than $3 billion, would provide the former president with a financial lifeline at a time when he faces a fine of more than $454 million from a civil fraud verdict in New York this month. are facing.

Representatives for Trump, Trump Media and Digital World did not immediately respond to requests for comment.

Andy Litinsky and Wes Moss, who met Trump as contestants on his reality show “The Apprentice,” pitched the idea of ​​a Trump-branded tech start-up and social media platform in early 2021 after losing the White House and being banned. But made Trump stand. From Twitter, now called X.

Trump agreed to the deal and was given 90 percent of the company, according to a motion for expedited action filed Wednesday in the Delaware Court of Chancery by the co-founders' partnership, United Atlantic Ventures. The proposal said the partnership took an 8.6 percent stake, while Bradford Cohen, a lawyer on the deal, was given the remaining 1.4 percent.

The motion states that the UAW started the Trump media business, hired employees and raised funds without receiving any fees or payment for its work. And although Litinsky and Moss left Trump Media that year amid a dispute with its current leadership, the UAW retained its shares, according to a Securities and Exchange Commission filing this month from Digital World.

The filing said Trump was to get 78 million shares in the post-merger company — a stake worth $3.5 billion at today's share price — and the UAW would get more than 7 million shares, a stake worth about $339 million. . “Throughout TMTG's corporate history, the UAW's 8.6 percent ownership interest has been recognized and honored,” the resolution states.

But UAW lawyers allege in the motion that Trump recently sold the partnership's stake as part of an “11th-hour, pre-merger corporate maneuver” designed to increase the amount of authorized stock from 120 million. Tried to “significantly reduce”. Shares up to 1 billion shares.

UAW lawyers wrote that the “dilution plan” had “no legitimate business purpose” and suggested that Trump and the Trump Media board planned to issue new shares to “Trump and/or his associates and children.” , which will reduce the share of UAVs. 1 percent.

The UAW “was promised an 8.6 percent stake in this company and, sadly, its business partners are baselessly reneging,” said the partnership's lead attorney, Christopher J. Clark Smith Villazor. Clark said in describing the lawsuit in an interview with The Washington Post. “They feel like: We've socialized the truth for you. You will get 90 percent. But some people are not happy with 90 percent.”

Clark has represented high-profile defendants including Hunter Biden, Elon Musk and billionaire businessman Mark Cuban. After representing President Biden's son for several years in negotiations related to the Justice Department investigation, Clark stepped down in August due to the possibility that he could be called to testify as a witness on Hunter Biden's behalf Is.

In the filing, Digital World said the proposal to issue 1 billion shares of “new Digital World” stock was a part of post-merger business changes. The SEC announced this month that the registration statement of the merger was effective, clearing the way for Digital World's shareholders to vote to finalize the merger at next month's meeting.

Digital World acknowledged the UAW controversy in an SEC filing, saying it had received letters from a UAW attorney last month stating that the partnership still had the power to appoint directors to Trump Media's board and “additional TMTGs.” Has the right to approve or disapprove construction. share.”

The UAW argued that its original service agreement with Trump would remain in effect through 2021, the filing said. Digital World said in the filing that the agreement was declared void by a Trump lawyer “about two and a half years ago.”

Digital World said in the filing that Trump Media had said it “strongly disagrees with the UAW's claim to any rights with respect to TMTG under the services agreement and believes that TMTG has no recourse against the UAW's potential claims.” There are legitimate defenses to.”

The filing said a UAW representative sent a text message to a Trump media noteholder this month suggesting the UAW might seek to “enjoin” or block the merger. The filing also said a UAW lawyer sent a letter to Trump Media threatening “legal action regarding the UAW's alleged rights in TMTG, including, if necessary, action to engage in a merger.” .

Digital World said in the filing that the legal dispute could halt or delay the merger deal, have a “significant impact” on the company's future performance or have a “negative impact on investor confidence and market sentiment.”

Delaware, where Trump Media was incorporated, is a common state for US business registration, and its chancery court is a mainstay for corporate litigation.

A sealed legal complaint was filed in the matter late on Wednesday night. Under Delaware Chancery law, it will not be made public for another five days as both sides discuss possible redactions. A copy of the motion for expedited processing, which outlines the dispute, was publicly visible in court records.

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