Trump's New Social Media Site Plans to Raise Money With Shell Company Scheme

[LetMyPeopleVote]

SPACs are interesting animals where the investors form an acquisition company to buy an existing company or operations and in effect take such operations public without doing an IPO. According to a friend at a big frim, SPACs are sort of loss leaders for SEC corporate types because you are not filing financial statements and the other disclosures about the company/operating going public. Normally a SPAC acquires an operating company with revenues and assets. This SPAC is acquiring a start up operation that does not have a working website and no revenues or operations at a value that "something that surely wasn’t pulled out of the former president’s ass." TFG took the public company that owned his casinos into bankruptcy while taking out large bonuses for himself. This deal smells

Link to tweet

Former President Donald Trump, a white supremacist who barely knows how to use a computer, announced late Wednesday that he plans to launch a new social media platform next year called Truth Social, with beta testing opening up to select users in November. And while the site was almost immediately infiltrated by pranksters mere hours after the announcement—long before people were supposed to be allowed to even create accounts—that’s not the most interesting part of the story.

No, the most interesting thing about Trump’s planned social media platform is how it’s going to be used to make money. Because wherever Donald Trump goes, extremely shady business practices always follow. And it’s going to be very interesting watching MAGA investors almost certainly get fleeced by Trump’s new business endeavor, which is looking to go public through a special purpose acquisition company, or SPAC.

The business that’s launching Truth Social is called the Trump Media and Technology Group (TMTG), which has a business address listed as Mar-a-Lago but isn’t registered yet with the state of Florida, as far as Gizmodo can tell. TMTG is valued at $1.7 billion according to a very real figure tweeted by spokesperson Liz Harrington—something that surely wasn’t pulled out of the former president’s ass.

TMTG will be merging with a shell company called Digital World Acquisition Corp. for the sole purpose of getting listed on a stock exchange, according to the Wall Street Journal. That way, Trump Media and Technology Group gets to go public by piggybacking on a different company and Trump’s “media and technology” company gets to avoid a ton of regulatory hurdles that exist to keep companies somewhat transparent under the theory that investors are less likely to get screwed.

......Normally, we’d be extremely wary of shady SPAC deals with unproven companies, but this is a special situation. Anyone who invests in Trump or his shell company know exactly what they’re getting into. If you support former President Trump, we encourage you to dump all your money into Trump Media and Technology Group. You’ll get everything you deserve.

Link to tweet

[Hortensis]

1. Truly amazing. He has every asset to launch a good business,

including millions of baked-in consumers, but can't resist doing everything wrong. Who can doubt his business model really will turn out to be to cheat as much and as many as possible? And end up failing?

I've read that successful businessmen who turn to white collar crime often do it because they prefer money made illegally to legal. For The Donald, it seems to be an indispensable part of his self image.

[ProudMNDemocrat]

2. Just another CON JOB from a CON MAN.

Anyone stupid to invest will lose out BIGLY.

[SWBTATTReg]

3. I'll just wait for the latest wave of hackers to demolish this company and its filings, etc. Just a

matter of time...

[underpants]

4. You see! Without Corey Lewandowski's wisdom and intellect

this is the sort of thing that happens.

[LetMyPeopleVote]

5. There is no way that TFG's operations would meet SEC requirements for a SPAC target company

What is more important is that I do not understand how one can roll a start up into a SPAC. As it appears to me, TFG's operations re a pure startup without a working website or any revenues. Target companies need to have financial statements for the Form S-4 that has to be filed to do the merger. https://www.forbes.com/sites/allbusiness/2020/11/11/10-key-questions-and-answers-about-spacs/?sh=2b1f6e862f83

6. How do SPACs target companies to acquire?
Once the SPAC has successfully completed its IPO, the sponsor can begin the search for a target company to acquire. Here are some of the criteria they employ in their deal search:

Deal size. Under stock exchange rules, the business combination must be with one or more targets that together have an aggregate fair market value of at least 80% of the assets held in the SPAC’s trust account (excluding certain items). To mitigate the dilutive impact of the 20% founder shares and make a De-SPAC transaction more attractive to a target, SPACs often prefer business combination targets that are four to eight times the SPAC size.

Industry. Most SPACs specify an industry or geographic focus for their target business combinations (e.g., tech sector, media industry, fintech, enterprise software).

Upside Potential. SPACs, like any other M&A buyer, seek to combine with targets that the sponsors believe have meaningful upside. This year, SPACs have increasingly focused on emerging growth companies that are relatively earlier stage than traditional IPO companies.

Financial Statements. The SEC proxy rules require that a proxy statement include two or three years of financial statements of the target, plus interim financial statements. The financial statements and the target’s auditor have to meet certain requirements, and thus the necessary audit or re-audit of the target’s financial statements can be a gating item for the business combination.

Public company readiness. It is important that the target company and its financial controls are ready to handle the rigor of being a public company with periodic reporting requirements.

Market Opportunity. SPACs will look for targets whose business has a large market opportunity.
Quality Management Team. The quality of a target’s management team will be an important factor for the sponsor.
Due Diligence. The SPAC will do extensive due diligence on the target company, similar to due diligence in M&A or IPO transactions.

TFG's operations do not appear to meet any of these criterion.