Trump Media sues co-founders, accusing them of ‘serious mismanagement’

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Moss and Litinsky claim that the 2021 agreement they signed with United Atlantic Ventures, LLC, the company Trump founded, guarantees them a stake of 8.6% of Trump Media’s total stock, which will be transferred to the new Is not affected by the issue of 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 lawsuit was filed in late March, around the same time that shareholders of shell company Digital World Acquisition Corp. voted to approve a merger with Trump Media, the private company behind emerging social media app Truth Social. Is a company.

Following the special purpose merger, newly public Trump Media’s stock began trading under the ticker DJT and soared as much as 50% in its Nasdaq debut last week.

But the share price fell sharply on Monday after the company disclosed a net loss of $58.2 million in 2023.

Trump Media’s lawsuit filed in Florida wants the court to compensate him for Moss and Litinsky’s “breach of fiduciary duty.”

In addition to Moss and Litinsky, the lawsuit names DWAC founder Patrick Orlando as a co-defendant, accusing him of being involved in those violations.

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

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

The company claims he made “wasteful decisions” that caused “significant losses” to Trump Media and caused DWAC’s stock price to decline. According to the lawsuit, he decided to pursue a merger with Orlando-based Benessere Capital Acquisition Corp. despite business conflicts with DWAC, which ultimately led to an investigation by the Securities and Exchange Commission.

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

The Trump media calls “baseless” the claim that the UAW is owed the stock, and says that the service agreement that Trump signed with the UAW in 2021 is no longer valid.

According to the lawsuit, after Trump representatives raised concerns about the agreement in July 2021, Eric Trump sent a letter to the UAW saying his father considered the agreement “void.” The UAW reportedly “accepted” Trump’s decision to cancel the elder contract.

Attorneys for Trump Media did not immediately respond to CNBC’s request for comment on the lawsuit. Litinsky and Moss could not immediately be reached.

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