The media company that was recently taken public by Donald Trump is suing its co-founders, accusing them of failing “spectacularly” to get the company off the ground and then trying to “avoid the deal.”
The lawsuit filed in Sarasota County, Florida, civil court seeks to block it Trump Media and 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 Trump signed with a company they founded, United Atlantic Ventures, LLC, guaranteed them an 8.6% stake in Trump Media’s total stock, which was not diluted by the release of new shares.
At DJT’s closing price on Tuesday, that share was 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 in the shell company Digital World Acquisition Corp. voted to approve a merger with Trump Media, a private company behind the new social media app Truth Social.
Following the special purpose merger, stock in the newly public Trump Media began trading under the ticker DJT and rose as much as 50% in its Nasdaq debut last week.
But the share price fell sharply on 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 says are “breach 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 involvement in those violations.
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 said.
Moss and Litinsky failed “at every turn,” Trump Media said of the two men, both former contestants on Trump’s former reality TV show “The Apprentice.”
They made a “haphazard decision” that caused “significant damage” to Trump Media and a drop in DWAC’s stock price, the company said. And they chose to pursue a merger with Benessere Capital Acquisition Corp. of Orlando, 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 the Trump Media-DWAC merger vote by suing the soon-to-be-public company, according to the suit, which first reported by Bloomberg.
Trump Media calls the claim that UAV owes the 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 a letter to UAV saying his father “considered” the agreement “void.” UAV allegedly “acquiesced” to the elder Trump’s decision to void the 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.
