President Donald Trump was able to gather enough funding to start a billion-dollar venture creating his own social media site that will allow him a place where he can't be banned. That funding, however, came from a Chinese company that has struggled with several investigations from the Securities and Exchange Commission.
A Washington Post report explained that the Shanghai company Arc Capital has frequently helped finance companies that don't have any revenue or offices.
"One claimed to be developing autonomous drone software despite having no employees; another said it operated a publicly-traded in-home bakery 'specializing in freshly-made cakes and cupcakes' before saying it pivoted into touch-screen technologies for a “diversified blue-chip client base,'" the Post said citing regulatory filings.
While the U.S. lets shell companies go public on the markets the SEC accused Arc of lying to investors about the specifics around those operations.
Arc Capital created Digital World Acquisition to invest in Trump Media and Technology Group with over $1.2 billion in cash. Digital World is listed as a special purpose acquisition company, a kind of shell company that raises money for private start-ups. It would help bring Trump back into the money game after he was bumped from the Forbes 400 list.
"There’s a shell company basically merging with another shell company, because, as far as we know, the Trump media company hasn’t yet been formed," said securities lawyer Robert Lamm. An unusual team of advisers is supporting the former president’s effort.
The report noted that "Apprentice" stars Andy Litinsky and Wes Moss are investors, according to sources. Self-proclaimed dairy farmer Rep. Devin Nunes (R-CA) became the CEO, despite not having any experience in C-suite management or social media. He has, however, unsuccessfully sued several social media accounts that trolled him.
Arc-backed companies were forced from selling shares in 2017 due to "material misstatements and omissions." But no charges have been brought yet. The SEC is now looking into the Digital World and Trump media relationship after a filing.
Trump's businesses, charities, and other projects have fallen under investigation in recent years, though that doesn't mean that the Trump Media company has done anything illegal.
Read the full report at the Washington Post.
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