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Company Behind Trump's Truth Social Under Investigation By Federal Prosecutors (independent.co.uk) 170

An anonymous reader quotes a report from the Independent: The so-called "blank check" company behind former president Donald Trump's Truth Social platform now appears to be the subject of an investigation by federal prosecutors who are looking into whether the company or its executives violated federal securities laws. Shares of the Special Purpose Acquisition Company, known as Digital World Acquisition Corporation, fell nine percent in early trading on Monday after CEO Patrick Orlando filed a statement with the Securities and Exchange Commission to report that the company, which is pursuing a merger with the former president's Trump Media and Technology Group, was issued a subpoena by a federal grand jury in the Southern District of New York.

Mr Orlando also wrote that each member of DWAC's board of directors has also been issued a subpoena by the same grand jury. The grand jury subpoenas, he said, appear to be "seeking various documents and information" that are substantially similar to subpoenas issued to the company by the SEC earlier this year, as well as documents relating to the company's previous SEC filings, "communications with or about multiple individuals, and information regarding Rocket One Capital," a venture capital and private equity firm. The US securities regulator is probing whether DWAC executives violated laws which ban negotiations between the company and Mr Trump's tech firm before DWAC went public in late 2021. After Mr Trump announced his company's pending deal with DWAC, shares in the public company skyrocketed by over 400 per cent.

A previous filing by Mr Orlando stated that the SEC subpoena sought documents concerning "among other things, Digital World's due diligence regarding TMTG, communications regarding and due diligence of potential targets other than TMTG, relationships between and among Digital World (and/or certain of Digital World's officers and directors) and other entities (including ARC Global Investments II LLC, Digital World's sponsor, and certain advisors, including Digital World's underwriter and financial advisor in its initial public offering)." Additionally, the pending merger is also the subject of an investigation by the Financial Industry Regulatory Authority, a commercial entity that acts as a self-regulator for brokerage firms and securities exchange markets.

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Company Behind Trump's Truth Social Under Investigation By Federal Prosecutors

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  • by chill ( 34294 ) on Monday June 27, 2022 @05:55PM (#62655818) Journal

    It is grift all the way down.

    • The Government or Trump?
    • by fermion ( 181285 )
      Trump Media aNd Turtles All The Way Down.
  • The stock has plummeted since Jun 10 . Were insiders selling?

    • Re: (Score:3, Informative)

      by quonset ( 4839537 )

      The stock has plummeted since Jun 10 . Were insiders selling?

      I had submitted a similar story [slashdot.org] which had more information, and specifically what you are asking about:

      Regulators also requested information about unusual trading activity in securities of Digital World before the merger announcement. There was a big surge in trading of Digital World warrants — a security that gives the holder the right to buy shares at later date and at a specified price — before the merger announcement.

      • Although related, your comment appears to be about events that happened several months ago and about buying, while my question is about events since Jun 10 of this year and about selling.

        • They are related because most likely people were exercising their warrants to buy stock at a set price, then, when the stock went , they sold, thus driving down the price. When investigations were announced, that only served to drive the stock down further.

          If you look at a six-month chart of DWAC [marketwatch.com], you can clearly see the stock was trading around $50/share when it first traded. It then went as high as $100/share in March before embarking on its plunge. Most likely that is around the time people exercised t

          • I think you are ignoring the dramatic plunge on June 10 to June 14, which was a steeper drop than the one in March and the timing doesn't fit your 6 month timeline from IPO to the time the warrants can be exercised.

  • Boggles the mind (Score:3, Insightful)

    by aerogems ( 339274 ) on Monday June 27, 2022 @06:24PM (#62655866)

    Why would anyone want to go into business with Trump. Forget about the four years he was POTUS (if only it were that easy) the man has a pretty shitty record as a businessman. Almost every business he's been involved with has tanked. He somehow managed to bankrupt a casino FFS. He has a reputation for stiffing people, being litigious AF, and has the attention span of a goldfish. None of these things should scream, "I want to go into business with that guy!"

    • Trump himself has proven you don't need to be smart to have money.

      • by Tablizer ( 95088 )

        > Trump himself has proven you don't need to be smart to have money.

        He is smart, smart at grifting the stupid. Probably because he relates.

        As an analogy, Kirk made a better Captain than Spock because Kirk understood how to deal with illogical aliens, Spock didn't.

        By the way, "Truth Social" was neither.

    • Re:Boggles the mind (Score:5, Informative)

      by quonset ( 4839537 ) on Monday June 27, 2022 @06:45PM (#62655904)

      He somehow managed to bankrupt a casino FFS.

      Three casinos [nytimes.com]. He bankrupted three casinos while raking in money for himself.

      None of these things should scream, "I want to go into business with that guy!"

      Digital World Acquistion has this to say in its S-4 filing [sec.gov] about risks associated with this purchase:

      Entities associated with President Trump have filed for bankruptcy protection. The Trump Taj Mahal, which was built and owned by President Trump, filed for Chapter 11 bankruptcy in 1991. The Trump Plaza, the Trump Castle, and the Plaza Hotel, all owned by President Trump at the time, filed for Chapter 11 bankruptcy in 1992. THCR, which was founded by President Trump in 1995, filed for Chapter 11 bankruptcy in 2004. Trump Entertainment Resorts, Inc., the new name given to Trump Hotels & Casino Resorts after its 2004 bankruptcy, declared bankruptcy in 2009. While all of the foregoing were in different businesses than TMTG, there can be no guarantee that TMTG’s performance will exceed the performance of those entities.

      And yet, Digital World Acquistion went ahead with the purchase. Makes one wonder, no?

      • It's almost like "There's a sucker born every minute." Some gambler will come along and decide to take a pull on the "Let's do Business with Trump!" slots. "Everyone can't lose, right?!!"
        • It's almost like "There's a sucker born every minute." Some gambler will come along and decide to take a pull on the "Let's do Business with Trump!" slots. "Everyone can't lose, right?!!"

          The sucker is everyone involved except those who broker the deal. The people at the very top of the pyramid enrich themselves in these schemes. They pay themselves well, issue themselves stock, etc etc and cash out while they are riding high on the buzz associated with economic activity. By the time the company goes into bankruptcy, they've already looted the coffers and run away with "their" share of the money. From their point of view it's pure benefit. It's nothing to them that people lose jobs and homes

    • Re:Boggles the mind (Score:5, Interesting)

      by fermion ( 181285 ) on Monday June 27, 2022 @06:58PM (#62655930) Homepage Journal
      Some background. A SOAC is called a blank check company because investors put money in a fund, often a derelict firm that is still listed on a reputable exchange, towards the further purchase of an unknown firm with unknown leadership and prospects.

      For the acquired firm the benefits are tons of cash, in this case a billion going into Trump and Nunes pockets. Also the acquired firm is a listed company with none of the due diligence.

      The benefit to the initial investor is that the SPAC will tend to buy a firm that looks good on paper, or is high profile, so will tend to inflate the stock, at least temporarily, so the early investors can cash out.

      I am unsure of the timeline and regulations related to this scenario. I do know it became clear early on that DWAC was going to acquire TMNTg and it seemed a little strange in the life cycle of a SPAC. I believe some investors did exit when it was known it would be a Trump company.

    • Re: (Score:3, Insightful)

      by rgmoore ( 133276 )

      It's the same reason the Saudis gave Jared Kirshner $2.4 billion for his "investment fund" even though he has no experience managing that kind of money. They're hoping Trump wins the 2024 election, so they're offering him a thinly veiled bribe. You can say the same thing for anyone who buys one of Trump's failing businesses for far more than it's possibly worth.

    • by mjwx ( 966435 ) on Tuesday June 28, 2022 @08:45AM (#62656956)

      Why would anyone want to go into business with Trump. Forget about the four years he was POTUS (if only it were that easy) the man has a pretty shitty record as a businessman. Almost every business he's been involved with has tanked. He somehow managed to bankrupt a casino FFS. He has a reputation for stiffing people, being litigious AF, and has the attention span of a goldfish. None of these things should scream, "I want to go into business with that guy!"

      Because greed.

      People will ignore all kinds of red flags, histories, common sense when they see the dollar signs. Not to mention that Trump is one of them... A "successful" "businessman" who like them inherited a shitload of money and has lost most of it, but it's important that he's one of them.

      Also if the last 5 years has taught us anything, is that Trump is a master at bullshitting and avoiding responsibility for it. He lies so hard, so often and so obviously that by the time you've demonstrated one lie, he's spread at least four more. His one true and only real talent is drawing in the gullible to give him money. So the gullible are going to keep giving him money.

  • All power is used to stringently attack all perceived political threats, both imaginary and real.

  • So very Trump (Score:5, Insightful)

    by jacks smirking reven ( 909048 ) on Monday June 27, 2022 @07:19PM (#62655960)

    This should have been simple, he has plenty of money. The site is already built on a developed framework, he's got the money to hire staff, moderators, press, hosting and keep it running for years. Generously this is tens of millions?

    Instead we get some weird holding company shenanigans, a board of directors (why, he could just keep this private) no direction on launch (he didn't post anything for months) and it's stocked with unqualified cronies (Devin Nunes is in charge, a guy who even conservatives should view as a bumbling lackey).

    The thing is it even is working and would have anyway. It's full of Trump supporters sure but it seems to have a decently active username nonetheless. It'll never be Twitter size by it's nature but it could be king of the second runners.

    Instead we get graft and controversy for literally no reason other than incompetent greed. This should be easy for a guy running a real estate empire, it's all so needlessly grifty.

    • Real estate has innate value, tied to its location. Graft is enough to acquire land, but it is not enough to create something of any worth.
    • This should have been simple, he has plenty of money.

      He doesn't. He has plenty of debt, and his name on some properties that are mostly owned by banks. Prove me wrong.

      • I was speaking more to his supporters about the conflict between what Trump says (I am very wealthy and successful) and what is happening here (I need wild investment strategies to support what is a relatively small project).

        The man does have some amount of wealth, I don't think anyone really disputes the fact that he is a "billionaire" but you're right in a way, is this a sign that he has no actual liquid currency to self-fund something to the tune of $50m? A combination of the fact that he has so little r

        • The man does have some amount of wealth, I don't think anyone really disputes the fact that he is a "billionaire" but you're right in a way, is this a sign that he has no actual liquid currency to self-fund something to the tune of $50m?

          Correct. That's why he had to go to Russia for banking. When it became public that Trump's fortune was based on defrauding Deutsche Bank into believing that he was in control of the family fortune when he was not, they finally cut ties with him — the whole purpose of continuing to prop him up so that he could look rich was that it made their decisions seem correct. Once that was provably false, they had no reason to continue doing business with him.

  • by CmdrPorno ( 115048 ) on Monday June 27, 2022 @09:22PM (#62656184)

    This is extremely SAD! The LEFT LEANING media is UNFAIRLY TARGETING this transaction because they hate the Dear Leader. PRESIDENTIAL HARASSMENT!

  • "Going after" any wrongdoing of anyone involved in that circus was an academic exercise before.

    The judicial landscape is now even friendlier to 'just making up some reason to treat certain people better' in the last few months

    "No faith in your government" was reserved for the overly cynical, trolls and conspiracy theorists not too long ago. I guess that makes me the first and third - I sure am not enjoying the irony of any of this.
  • 60% chance that this is a politically motivated investigation. I also would not be surprised if it was triggered by revelations provided by a politically-motivated "whistle blower."

    I wish I did not have to think that, but that's where we are these days.

  • The NY Times states that the investigation was kicked off due a large amount of trading activity in the warrants of Trump's Truth Social's acquiring CPAC occurred before the deal was announced. https://www.nytimes.com/2022/0... [nytimes.com]

    According to Yahoo finance (https://finance.yahoo.com/quote/DWACU/), on Monday October 18th 13 million shares traded and the CPAC price shot from $10 to $108 in one day. So a bunch of unsophisticated traders put in uncapped buy orders which probably caused warrant holders to exerc

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