Trump Media sues its co-founders, accuses them of ‘severe mismanagement’

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.”

The
lawsuit
filed
in
Sarasota
County,
Florida,
civil
court
seeks
to
bar


Trump
Media
&
Technology
Group
co-founders
Wesley
Moss
and
Andrew
Litinsky
from
appointing
members
to
the
company’s
board
—
or
from
owning
any
of
its
shares.

Moss
and
Litinsky
claim
that
a
2021
agreement
that
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
the
issuance
of
new
shares.

At
DJT’s
closing
price
Tuesday,
that
share
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
suit
was
filed
in
late
March,
around
the
same
time
that
shareholders
in
the
shell
company


Digital
World
Acquisition
Corp.
voted
to
approve
a

merger
with
Trump
Media,
a
private
company
behind
the
fledgling
social
media
app
Truth
Social.

Following
the
special
purpose
merger,
stock
in
the
newly
public
Trump
Media
began
trading
under
the
ticker
DJT
and
shot
up
by
as
much
as

50%
in
its
Nasdaq
debut
last
week.

But
the
share
price
fell
sharply
Monday,
after
the
company
disclosed

a
$58.2
million
net
loss
in
2023.

Trump
Media’s
lawsuit,
filed
in
Florida,
wants
the
court
to
award
it
damages
for
what
it
claims
are
Moss
and
Litinsky’s “breaches
of
fiduciary
duty.”

In
addition
to
Moss
and
Litinsky,
the
lawsuit
names
DWAC
founder

Patrick
Orlando
a
co-defendant,
accusing
him
of
being
involved
in
those
breaches.

According
to
the
Florida
suit,
Moss
and
Litinsky
were
responsible
for
establishing
Trump
Media’s
corporate
governance
structure,
preparing
the
launch
of
Truth
Social
and
finding
a
shell
company
for
a
merger
to
take
the
media
company
public,
the
lawsuit
says.

Moss
and
Litinsky
failed “at
every
turn,”
Trump
Media
alleges
of
the
two
men,
both
former
contestants
on
Trump’s
former
reality
TV
show “The
Apprentice.”

They
made “wasteful
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
Orlando’s
Benessere
Capital
Acquisition
Corp.,
despite
a
business
conflict
with
DWAC
that
ultimately
triggered
an
investigation
by
the
Securities
and
Exchange
Commission,
according
to
the
lawsuit.

Moss
and
Litinsky
then “decided
to
retaliate”
on
the
eve
of
Trump
Media-DWAC
merger
vote
by
suing
the
soon-to-be-public
company,
per
the
suit,
which
was
first

reported
by
Bloomberg.

Trump
Media
calls
the
claim
that
UAV
is
owed
stock “baseless,”
and
says
the
services
agreement
Trump
signed
with
UAV
in
2021
is
no
longer
valid.

According
to
the
lawsuit,
after
Trump’s
representatives
raised
concerns
about
the
agreement
in
July
2021,
Eric
Trump
sent
UAV
a
letter
saying
that
his
father
had “deemed”
the
agreement
to
be “void.”
UAV
allegedly “acquiesced”
to
the
elder
Trump’s
decision
to
void
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.