Trump Media & Technology Group Loses Lawsuit Against Washington Post Over Story About Trump Social Deal
From Judge Tom Barber (M.D. Fla.) today in Trump Media & Tech. Group Corp. v. WP Co. LLC:
This lawsuit for defamation by Plaintiff Trump Media & Technology Group Corp. (“TMTG”) against Defendant WP Company LLC (the “Post”) arises from an article titled “Trust linked to porn-friendly bank could gain a stake in Trump’s Truth Social,” published by the Post on May 13, 2023, and circulated on Twitter (now known as “X”) by Post personnel. The article described events related to a contemplated merger between TMTG and a special purpose acquisition company (“SPAC”) known as Digital World Acquisition Corp. (“DWAC”) as part of taking TMTG’s “Truth Social” business public.
The article noted there had been a delay in obtaining SEC approval for the merger, which supporters of former President Donald Trump and TMTG attributed to political bias. The article offered a “possible” alternative explanation: concerns by the SEC and other regulators regarding a loan obtained by TMTG, the identity of the lender, and whether the loan had been properly disclosed by TMTG and/or DWAC to DWAC’s shareholders or the SEC. The article cited various sources for its story, including “internal documents a company whistleblower has shared with federal investigators and [the Post],” as well as statements expressly attributed to the whistleblower, former TMTG officer Will Wilkerson.
The article related that in late 2021, with the proposed merger “frozen” and TMTG concerned about paying its bills, then-DWAC president Patrick Orlando announced he had arranged for an $8 million loan from an entity known as “ES Family Trust.” According to the article, the loan was part of a deal in which TMTG would receive the loan and, in exchange, ES Family Trust would acquire an equity interest in the public entity to be formed from the merger of TMTG and DWAC. This loan-for- stock deal was reflected, according to the article, in a convertible promissory note, although the article acknowledged that the only copy of the note the Post had been able to locate was unsigned.
The article reported that some of the funds were wired by another entity, Paxum Bank, which had ties to ES Family Trust and to the adult film industry. Also, according to the article, TMTG paid a finder’s fee of $240,000 in connection with the loan to Entoro Securities, a Texas entity of which Orlando was a managing director. Although the article did not refer to a specific document evidencing the payment, it pointed to a broker agreement regarding the fee and an invoice for payment from Entoro.
The article stated that neither the loan-for-stock deal nor the finder’s fee had been disclosed to shareholders of DWAC or the SEC. It further reported the opinion of Michael Ohlrogge, a New York University law professor who studies SPACs, that these matters could affect the value of the shares and should have been disclosed. The article also noted that the British journal The Guardian had earlier reported that federal prosecutors in New York were investigating whether TMTG had violated money laundering statutes in connection with the loan, and that TMTG Chief Executive Officer Devin Nunes had filed a lawsuit against Wilkerson and others (including The Guardian) asserting that the Guardian story was “fabricated.” …
TMTG does not challenge the accuracy of the bulk of the story set forth in the Post’s article, including the assertions that TMTG borrowed $8 million from an entity or entities with connections to the adult film industry, that the loan deal involved a pledge of stock in the company to be formed by the merger, and that some TMTG executives were concerned about the lack of information regarding the lender. TMTG’s defamation claims now center on the Post’s statements regarding the disclosure of the loan and the finder’s fee to the SEC and investors….
The court concluded that the allegations were substantially true, plus that TMTG in any event didn’t adequately allege “actual malice” (i.e., knowing or reckless falsehood on the Post‘s part):
Loan Statements
The first statement TMTG challenges is the following, taken from the text of the Post’s May 13, 2023, article:
[T]he role ES Family Trust would assume in Trump Media and Technology Group has never been officially disclosed to the Securities and Exchange Commission [“SEC”] or to shareholders in Digital World Acquisition [“DWAC”], the special purpose acquisition company, or SPAC, that has proposed merging with Trump’s company[.]
… The Court agrees with the Post that these al
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