The Trump Media and Technology Group (TMTG) has already announced it has lined up $1 billion from undisclosed investors once a future merger deal goes through, and it’s safe to presume Nunes will at least get a nice paycheck as CEO. However, one has to marvel at an arrangement that moves him from the center of GOP power to a private sector post he seems unqualified to fill.
The story of Nunes and TMTG becomes easier to understand when you consider Donald Trump’s hiring history. As president, he used the word “central casting” to talk about his picks for various jobs. As a businessman, he often stressed loyalty over experience and expertise. This is in large part how his prior bodyguard Matthew Calamari rose to a top executive post in the Trump Organization, and how a young lawyer/entrepreneur named Michael Cohen became his right-hand man there. (While Cohen called himself Trump’s loyal “fixer” in business, Democratic Congressman Eric Swalwell said Nunes was Trump’s “fixer” in Congress.)
And now there’s Nunes, who becomes CEO of Trump’s nascent media company without any evident media business experience but a proven record as a trusted Trump loyalist. In 2016, Nunes served on Trump’s transition executive committee, advising on key cabinet selections. In Congress, he was one of Trump’s staunchest allies, and emerged as one of his key defenders when he faced impeachment. In one truly Trumpian flourish, he even compared Trump to George Washington.
With his well-established tendency to value loyalty over other traits, Trump’s hiring of Nunes comes from his old playbook. The question, then, becomes: What’s in it for Nunes? In accepting the role, he will give up his chance to chair the powerful House Ways and Means Committee if Republicans take control of the lower chamber in the 2022 midterm elections. However, the Congressman would have faced a tough reelection, with his current district being redrawn to include more Democratic voters. In this context, why not avoid all that trouble, potentially make more money in the private sector, and forge closer ties with the former president, who still wields considerable power over the GOP?
The answer to “why not” may lie within the risk of going all in on Trump’s media venture. Though yet to actually conduct any business in the traditional sense of the word, the Trump Media and Technology Group has already caught the eye of the SEC. The issue is complex, but the summary is that federal regulators are investigating a deal for TMTG to merge with another entity called Digital World Acquisition, a special purpose acquisition company (SPAC).
A SPAC is sometimes referred to as a blank-check company, since it has no operation beyond what’s required to raise capital. It sells shares to investors through an initial public offering with the intention of later merging with a private company in a process that allows the private firm to go public more quickly.
Since they are essentially buying a pig in a poke, SPAC investors rely heavily on the credentials of a SPAC’s creators. When the famous tycoon Richard Branson created one, his history of splashy successes with Virgin Group undoubtedly added to the appeal of the offering. But shares of the Branson SPAC, called VG Acquisition Corp., went on a rollercoaster ride in 2020 before it finally found a merger partner. So far, things seem to be working out well enough, as the merger saw Branson get into a real business with cash flow.
The Digital World Acquisition SPAC is headed by Patrick Orlando, who worked at German Deutsche Bank and founded his own investment bank, and it’s backed by a number of major hedge funds. But the Securities and Exchange Commission has already launched an ongoing investigation into Digital World Acquisition, requesting information about its deal with TMTG. SPACs are supposed to raise capital before a merger is lined up, and Digital World Acquisition may have skirted securities laws by discussing a potential deal before it went public without disclosing it.
In a filing on December 6, Digital World said it received a document and information request from the SEC, including documents relating to meetings of its board of directors; its policies and procedures related to trading; and identification of banking, telephone and email addresses as well as identities of certain investors.
Digital World indicated it has cooperated with the request, adding per the SEC the investigation does not mean federal regulators have “concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event or security.” Trump Media and Technology Group hasn’t responded to requests for comment.
SPAC investors who were initially drawn in by Orlando’s finance credentials might not feel reassured by Trump’s track record in business, although he’ll certainly have loyal followers who will want to get in on the venture. After the January 6 attack on the US Capitol, Trump was banned from social media platforms like Twitter and Facebook, limiting his ability to spread misinformation and hijack the news of the day. Trump railed against these tech companies, claiming they were banning free speech. When two radio hosts who had once competed on “The Apprentice” pitched Trump the idea of a new conservative media company, they agreed to set up a company and merge with a SPAC, The New York Times reports.
Trump, however, is infamous for his many failed businesses and bankruptcies, including one that involved a public firm traded under the ticker symbol DJT. In that case, the company gave Trump a nice bonus and paid to maintain his jet before declaring a bankruptcy that cost investors dearly.
As for Nunes, his resume is political, not corporate. A Republican first elected in 2002 at the age of 29, he was reelected every two years thanks to California’s Republican-leaning 22nd congressional district. Early in his career he sponsored bills to help his constituents, especially dairy farmers. (His own family has history in the industry.)
Later, Nunes began showing a feistier side. In 2010, he published a book in which he called warnings about climate change “hysteria” from a “Doomsday cult.” In 2014, he went after fellow Republican Rep. Justin Amash after Amash criticized US security surveillance. He called his colleague “Al Qaeda’s best friend in the Congress.”
Although he rose in seniority, eventually becoming chairman of the House Intelligence Committee, Nunes did not have a real national profile until he became one of Donald Trump’s more devoted supporters. He eventually ended up resembling the former president as a thin-skinned and hyper-combative public figure. Nunes sued many news organizations, including CNN, as well as a GOP consultant and a fruit farmer who Nunes felt had insulted him. He even went to court in an attempt to silence an unknown person who operated a parody social media account under the name Devin Nunes’ Cow.
Winning the job as CEO of a media company could be Nunes’ reward for his years of service to his president. How big of a reward this will be is anyone’s guess. But according to the company’s own documents, TMTG projects $3.6 billion in business come 2026.
Of course, it’s all just speculation at this moment. Yet before banking on this team, investors would be wise to do their due diligence about who will be holding the book of blank checks.
