By: Donald V. Watkins
Copyrighted and Published on March 19, 2024
An Editorial Opinion
On February 16, 2024, a New York state court found that Donald Trump, Donald Trump, Jr., and Eric Trump schemed for years to defraud banks and insurers by inflating his wealth on financial statements used to secure loans and make deals. The court entered a $454 million civil fraud judgment against Trump and his sons, who are appealing this ruling.
The day before the much-anticipated court ruling in Donald Trump's case, the U.S. Securities and Exchange Commission approved a merger of Trump Media and Technology Group with Digital World Acquisition Corp., a publicly-traded blank-check acquisition company. Trump's media company owns Truth Social, which he founded after he was banned from Twitter (now known as X) in 2021.
Trump Media's merger deal with Digital World was valued in February at an estimated $10 billion. This valuation was purely speculative.
Digital World’s shareholders are scheduled to vote on the merger deal on Friday, March 22, 2024.
Since its founding in 2021, Truth Social has sustained massive financial losses and a limited base of users (estimated 607,000 monthly users as of July 2023). Trump has 6.61 million followers on Truth Social. Digital World says Truth Social has so far had 8.9 million signups.
The Commission's approval of the merger occurred despite Donald Trump's documented history of filing business bankruptcies – six to be exact -- and stiffing creditors.
The merger was approved while Donald Trump is awaiting state and federal criminal trials in New York, Washington, Atlanta, and Miami on 88 felony charges.
Donald Trump, Jr., who was also found liable of business fraud in the New York civil case, is slated to join the board of directors of the merged entity.
Despite all of these red flags, Donald Trump will own between 58.1% and 69.4% of the combined company.
If Digital World’s shareholders approve the merger deal, Trump will become the first person in the history of the Securities and Exchange Commission to own a majority interest in a publicly traded company AFTER he was: (a) convicted of repeated acts of civil business fraud in court, (b) indicted by state and federal authorities on 88 felony charges, and (c) involved in six business bankruptcies.
The Securities and Exchange Commission is supposed to be the watchdog agency that protects the investing public from fraudsters. It rarely performs this function. Instead, the Commission has become a cleansing agent for crooked Wall Street banks, major utilities like the Southern Company, and soiled businessmen like Donald Trump.
With the Trump Media-Digital World merger deal, the Commission found a pathway to hold its nose and look past Donald Trump’s adjudicated business fraud, four criminal indictments, and six corporate bankruptcies so that Trump and his son could (a) seize control of a public social media company and (b) save Truth Social from bankruptcy.
The Securities and Exchange Commission is as crooked as the Trumps. No other explanation makes sense for its approval of the Trump Media-Digital World merger deal.
Digital World’s share price closed at $35.57 on Monday -- the same day Trump's lawyers announced that he was unable to post a $464 million appeal bond in his New York civil fraud case. The share price is down from $50.49 in February when the Commission approved the merger.
We now know the highly touted Trump Media-Digital World stock is virtually worthless since it does not provide Donald Trump with the amount of liquidity he needs to post a $464 million appeal bond in his civil fraud case.
From the public's standpoint, the Commission's approval of the merger has facilitated the nightmare scenario of stacking of fraud on top of fraud.