Trump Media deal faces calls for inquiry over alleged ‘influence peddling’
Democratic groups escalated calls on Thursday for Congress to investigate Donald Trump’s social media company Trump Media after a report that it relied partly on emergency loans in 2022 traced back to a Russian-American under federal criminal investigation to make it to its stock market debut.
The move increased political scrutiny into the merger between Trump Media Technology Group and the blank-check company Digital World Acquisition – which could net Trump about $4bn – as federal prosecutors secured guilty pleas from two investors who insider-traded on the deal.
In a three-page letter on Thursday, the Democratic-aligned group Congressional Integrity Project pressed the Republican House oversight chair, James Comer, to launch a parallel congressional investigation into the Trump Media merger and hold hearings into the nature of the loans.
“We are calling on you to investigate possible influence peddling and corruption involving a former president and current presidential candidate,” wrote the Congressional Integrity Project’s executive director, Kyle Herrig.
The request came a day after the Guardian reported that Trump Media was kept afloat in 2022 with loans provided in part by a Russian-American businessman named Anton Postolnikov, when a securities investigation delayed the original merger date and imperiled its cash reserves.
The delay led Trump Media to seek bridge financing, including from an entity called ES Family Trust, which operated through an account at Paxum Bank, a small bank registered on the Caribbean island of Dominica that is best known for providing financial services to the porn industry.
Leaked documents obtained by the Guardian made clear that ES Family Trust operated like a shell company for Postolnikov, who co-owns Paxum Bank and became a subject of the criminal investigation into the Trump Media merger.
The concern surrounding the loans to Trump Media is that ES Family Trust may have been used to complete a transaction that Paxum itself could not, as it did not offer loans in the US because it lacked a US banking license and is not regulated by the FDIC.
“The American people deserve to know the circumstances around ES Family Trust’s loan to Trump,” Herrig wrote. “It is also imperative to determine whether there was any quid pro quo discussed.”
There is no indication that Trump Media had any idea about the nature of the loans beyond the fact that they were opaque, nor has the company or its executives been accused of any wrongdoing. A lawyer for Trump Media called the story a “hoax” in a statement after it was published.
Still, the Trump Media merger has drawn scrutiny because Trump’s stake in the company amounts to significant increase in his net value.
Even if Trump sold only some of his position, he would probably gain a major windfall that could be used to pay about $500m in legal costs stemming from his various civil and criminal cases. That would ease the burden on his political action committees, which are now paying the bills.
In addition, Postolnikov’s connection to the loans raised new questions about the involvement of Michael Shvartsman, who pleaded guilty with his brother to securities fraud weeks before he was due to go to trial on charges of insider trading and money laundering over the Trump Media merger.
The Guardian reported that the creation papers for ES Family Trust named Shvartsman as a successor trustee. ES Family Trust stands to gain from the Trump Media merger because the $8m was loaned in the form of convertible notes, meaning it converted to a stake in the post-merger company.
While precise figures can only be known by Trump Media, ES Family Trust’s stake in Trump Media is now worth between $20m and $40m, even after the company’s share price plummeted after a poor earnings report.
“The full extent of his involvement in the trust is unclear, and getting to the bottom of that fits within your mandate as chairman of the House oversight committee,” Herrig wrote of Shvartsman.
Democratic activists have been eager to attack Trump’s business deals as a counterweight to Republicans’ impeachment inquiry into Joe Biden, which has unsuccessfully tried to tie the president to business deals done by his son Hunter Biden, in an effort to show corruption or influence peddling.
The Biden impeachment inquiry hit a major setback in February after the prosecutors charged an FBI informant with fabricating claims being used by Republicans for their allegations, that Biden and his son each sought $5m in bribes from a Ukrainian company.