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Wait, There Is Yet Another Case against Trump Pending

Last week we ran a small table listing five of Donald Trump's legal woes. But actually, we missed one. There is a sixth problem lurking out there. It is very low profile and very wonky, but it could surface one of these days. Let's take a look. It is significant in the sense it may be the key to why Trump isn't posting on Twitter, even though Elon Musk reinstated him months ago.

The circumstances are murky, but here is what we know. When Trump was kicked off Twitter for lying all the time, he decided to found his own boutique Twitter clone, which he called TRUTH Social. It is legally owned by Trump Media & Technology Group, a company he formed just for that purpose. He owns 99% of the shares, even though he didn't put any money into the company.

A second relevant company is Digital World Acquisition Corp., headed by financier Patrick Orlando, a former derivatives trader for Deutsche Bank, for many years the only bank willing to deal with Trump (though now, even they won't touch him). Digital World is a Special Purpose Acquisitions Company. Companies of this type collect money from investors with the intention of later buying up one or more other companies and either running them for a profit or flipping them. Typically it takes 1-2 years to locate a target and then buy it with the capital the SPAC has in the bank. Sometimes it is a merger, rather an outright purchase. This is pefectly legal and actually quite common. Obviously it works only if the investors have a lot of faith in the skills of the SPAC's CEO and are willing to go on a blind date with him. Orlando is apparently a pretty fast talker. He raised $1.25 billion for Digital World. He could have opened the biggest chain of used car lots in the world, but he didn't. Here is a list of some of Digital World's investors. Many of them have ties to Trump. There were also others who put in as much as $30 million apiece. Some of them might be Russian.

On Sept. 8, 2021, Digital World had an IPO in which it raised another $293 million. In its SEC filing, Digital World said that it had no prospective targets for purchasing or merging with. In Oct. 2021, it merged with Trump Media & Technology Group, pouring something like $1 billion into Trump's company. Since the average time for a SPAC to do due diligence and pick a target for buying or merging with is 17 months, doing it in a single month is a massive red flag. The SEC suspects that Orlando planned the merger with Trump's company from the get-go but didn't bother to mention this in the IPO filing. This violates securities law since, at the time of an IPO, the company going public is required to tell buyers of its shares what it is up to and what it plans to do. Having a secret deal lined up that only a few insiders know about is a big no-no in IPO-land. When the SEC got wind of this, it put the merger on hold. Indefinitely. Bummer for Trump since an injection of $1 billion would have been nice. Remember, it is always about the grift.

SEC officials think that Trump knew Orlando beforehand and they might even have had some discussions before the IPO. Having secret discussions between insiders that are not public just before an IPO violates all kinds of laws.

But there is more. In Dec. 2021, Orlando wired $2 million to Trump's company from Paxum Bank and then $6 million more. Paxum Bank is located on the tiny island of Dominica (not to be confused with the Dominican Republic). The bank is partly owned by Anton Postolnikov, a relation of Vladimir Putin's ally Aleksandr Smirnov, who has worked in several high-level jobs close to Putin. The SEC has reason to believe Paxum engages in money laundering. So mix Trump, multiple shell companies, big money, an IPO that might have violated securities law, Russians, a bank that is tied to a Putin associate and might be engaged in money laundering—what could go wrong here? Could it be that Trump is doing big-time money laundering for the Russians in exchange for them financing a company of which he owns 99% of the stock? The SEC is curious about this.

If this story is even close to being true, Trump must know that he could be facing life in prison on all the violations of securities laws. Paying off porn stars is small potatoes compared to this stuff. He knows if he is elected president, he could appoint a friendly SEC chairman who could close the investigation and not bring charges. This suggests that he will not drop out of the race no matter how many indictments he faces because he can't reasonably expect Ron DeSantis to appoint an SEC chairman who will let him off the hook. DeSantis has nothing to gain from doing that.

Oh, and Twitter. It is rumored that when Trump talked to Orlando early on, he promised to stay on TRUTH Social, and on that basis Orlando found investors who thought that TRUTH Social would be a financial success. If Trump were to suddenly dump TRUTH Social and go back to Twitter, the value of the merged company (assuming the SEC allows that, which seems unlikely at this point), would instantly drop to zero. The investors would not be happy. Cue lawsuits from a bunch of steaming billionaires who felt duped and are quite capable of hiring the best lawyers in the business. Trump doesn't need that in the middle of a presidential campaign. So he may stick to TRUTH Social for the time being. Being on Facebook and YouTube is different since they are not direct competitors to Twitter. Next time we tell you something is murky, believe us the first time. (V)

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