Company That Wants To Buy Trump's Truth Social Getting So Many Subpoenas It's Gonna Get Sick Of ... You Know
It's been a rough week over at Truth Social, Donald Trump's trash fire Twitter knockoff social media platform. The entire purpose of this exercise is to take the site's parent company, Trump Media and Technology Group, public, by merging it with Digital World Acquisition Corp., the "blank check company" that was supposed to Underpants Gnome this whole thing into profitability. But this morning, as Axios's Dan Primack was first to note, DWAC disclosed that every member of its board of directors received a federal grand jury subpoena on June 16, and the company itself got its very own subpoena last Friday. This does not augur well for the future of this deal.
On the off chance that none of these words mean anything to you, let's back up for a sec, shall we?
DWAC is a special purpose acquisition company, AKA a SPAC. It exists to hoover up a bunch of cash, take itself public, and then buy a private company, which is then spared the indignity of disclosing its books as it would have to if it went public on its own. If you were, say, a Dollar Store version of Twitter with no apparent ability to compete with established social media companies and a pitchman who is toxic to half of America (and more or less all of not-America), a SPAC would be a pretty good way to gin up cash. Because Donald Trump may be a shitty businessman, but his fans are a bunch of rabid maniacs who have demonstrated their willingness to open their wallets on command for Dear Leader.
Which is how DWAC's stock rocketed from $10 to a brief high of $175 shortly after opening, based solely on a MS Paint-quality pitch deck valuing the company at $1.7 billion and promising to take on CNN, Disney+, iHeart Media, Google, Amazon, and Stripe under the bold leadership of CEO Devin "Cowpoke" Nunes. As of this writing, it's valued at about $25 per share, with a market capitalization (i.e. the value of all the outstanding shares) of $930 million.
The problem is that you can't play fast and loose with the Securities and Exchange Commission the way you can when you're hyping Florida real estate. If you do the equivalent of, say, lying about how many floors your building has, those government bean counters tend to notice, and they get all pissy about it.
SEC regulations say a SPAC is supposed to go public before negotiating with the target company. The New York Timesreported in October that DWAC was under investigation for violating this rule by negotiating with Trump and the backers of his social media venture before the initial public offering, specifically through a Miami banker named Patrick Orlando. Orlando, who just so happens to be DWAC's CEO, was allegedly talking to Trump in March of 2021, despite putting out prospectuses in May, June, July, August, and September saying “We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target."
The SEC investigation continues apace. But in the meantime, DWAC disclosed this morning that the company and its board members had all gotten subpoenas from a federal grand jury in the Justice Department's office in the Southern District of New York. And that shark tank does not hand out investment capital.
The grand jury is seeking substantially the same information as the SEC, and it has specific questions about Miami investment firm Rocket One Capital. CNBC reports that DWAC board member Bruce Garelick resigned last Wednesday. Garelick is — or perhaps was — the chief strategy officer for Rocket One. We'd check his status, but as of this morning, the company's website looks like this:
Probably just a coincidence, right?
DWAC's SEC disclosure admits that "These subpoenas, and the underlying investigations by the Department of Justice and the SEC, can be expected to delay effectiveness of the Registration Statement, which could materially delay, materially impede, or prevent the consummation of the Business Combination." Which is lawspeak for "we may not be able to close this deal because the feds are so far up our ass they're tickling our tonsils."
So if you shelled out cash to buy DWAC stock to show your love of all things MAGA, well ... good luck to ya.
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Liz Dye lives in Baltimore with her wonderful husband and a houseful of teenagers. When she isn't being mad about a thing on the internet, she's hiding in plain sight in the carpool line. She's the one wearing yoga pants glaring at her phone.