Reported by Drew Harwell

In October 2021, former president Donald Trump announced that his media company, the owner of the platform Truth Social, had sealed an incredible deal: a merger with a “special purpose acquisition company” that would deliver to his firm $300 million toward his promise of giving “a voice to all.”

By then, however, the insider trading by investors in the SPAC, Digital World Acquisition, had already begun, according to documents filed recently in the criminal case against three Digital World investors who’ve been charged with securities fraud in New York federal court.

Digital World’s chief executive, Patrick Orlando, a Miami financier Trump had hosted at his golf clubs, had been telling investors privately for months that he’d been talking with Trump about the deal, the filings assert — a violation of federal securities law, the Securities and Exchange Commission would say later, given his company’s pledge in regulatory filings that its leaders had held no talks with any merger targets.

One investor, the Miami Beach businessman Anton Postolnikov, had amassed a huge stake in Digital World. Postolnikov, who was born in Russia and is the nephew of a longtime Russian government official, sold most of his stake just days after Trump’s announcement sent the stock soaring, according to an FBI agent’s search warrant affidavit. His profit: $22 million.

Another, a Ukraine-born nightclub manager turned private equity investor named Michael Shvartsman, told his business partners and a neighbor about the moneymaking opportunity, according to the affidavit — before securing $18 million in profits for himself.

Those profits caught the attention of federal officials who launched a sprawling investigation into Digital World’s investors, the details of which raise questions about how Trump, who built his political reputation in part on having mastered “the art of the deal,” ended up committed to a business arrangement that federal agents now allege was undermined from its inception by financial fraud.

Trump and Trump Media have not been accused of wrongdoing in the case. But Trump Media has been blocked from accessing the $300 million it expected to receive through the merger — money that it could use to build out Truth Social, Trump’s main online megaphone, ahead of the November election.

Read full report: https://www.washingtonpost.com/technology/2024/02/03/trump-social-dwac-investigation/