Jeff Danziger’s award-winning drawings are published by more than 600 newspapers and websites. He has been a cartoonist for the Rutland Herald, the New York Daily News and the Christian Science Monitor; his work has appeared in newspapers from theWall Street Journal to Le Monde and Izvestia. Represented by the Washington Post Writers Group, he is a recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army as a linguist and intelligence officer in Vietnam, where he was awarded the Bronze Star and the Air Medal. Danziger has published ten books of cartoons and a novel about the Vietnam War. He was born in New York City, and now lives in Manhattan and Vermont. A video of the artist at work can be viewed here.
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Reprinted with permission from DailyKOsOn Wednesday evening, Donald Trump's get-around-the-ban surrogate on Twitter, Liz Harrington, issued a statement announcing the formation of the "Trump Media and Technology Group" (TMTG). Most of the attention focused on this missive has been centered around the announcement of something called "TRUTH Social"—also known as yet-another-Trump-focused-Twitter-clone.
But that's not the real point of TMTG. The real point is that this is a scheme through which Trump can collect several hundred million dollars, even if his new social platform never posts a tweet, or a toot, or a fart, or whatever they end up being called.
The truth behind TRUTH Social is right there in the first paragraph of the announcement, which is not focused on the technology behind the platform, or anything that Trump is bringing to the table. Instead, that paragraph is dedicated to explaining how the project has been given "an initial enterprise value of $875 million" and "a cumulative valuation up to $1.7 billion." Which is amazing, because what it seems to have is nothing more than a credit line and some highly generic code that was hacked within minutes of the beta address becoming known.
No sooner had the first test invites been handed out than someone spoofed Trump's account and posted, well, as Daily Beast contributor Steven Monacelli accurately puts it, "a photo of a pig defecating on its own scrotum." Two hours after it first went up, the whole site came down.
However, it doesn't matter if the site ever sticks its head above the waste pool again. Because that's not the point. Donald Trump is potentially walking about with $340 million, even if it fails completely. That's the point.
What Trump is attempting here is something called a SPAC, or Special Purpose Acquisition Companies. It's also known as a "reverse merger" or a "blank check company." It's a scheme in which some low-value shell company that's already listed on a stock market "buys" a private company, then relists itself under the name of that new company. In almost all cases, what's really going on is that the private company is just taking over the empty husk of that shell company—a company that may have existed for no other purpose than to serve as a placeholder for some future SPAC.
Why go through these steps? Because getting listed on a stock exchange generally requires clearing a number of hurdles, including meeting requirements from the Securities and Exchange Commission. SPACS can just pop into existence, taking a fast track to a stock listing while dodging almost every qualifying step.
The whole idea of the SPAC is relatively new, and in the last year they've really taken off. In some cases, these schemes have allowed start ups to jump immediately to market, capitalizing on interest in new technology or rising industries. Among others, several small electric car companies made a sudden appearance on NASDAQ last year after taking over the corpses of fading corporations.
But there's one particular kind of SPAC that's described in this article from Mergers and Acquisitions. A kind known as the "celebrity SPAC."
First, a "celebrity" or another notable person (the "Sponsor") raises capital by taking an empty holding company (the SPAC) public in an IPO. This SPAC then uses the cash proceeds from the IPO and a large stock issuance to acquire a private company, making it public.
That's exactly what's happening with TMTG. Teenage Mutant Turtle Gropers—sorry, that's Trump Media and Technology Group—doesn't have to rival Twitter. It doesn't even have to threaten whatever "conservative social media platforms" are still limping along out there. It just has to collect investors. Because this:
Unlike IPOs, however, the Sponsor gets a 20 percent stake, called a "Promote," and there's much less regulatory scrutiny. Oh, and this "Sponsor" invests almost nothing in exchange for this 20 percent stake.
Remember the numbers on how this was being "valued" in Trump's announcement? That's right. This is an attempt by Trump to scam between $175 million and $340 million with essentially no investment and no effort. As the article explains, the "sponsor" can walk away with a bundle, "even if the SPAC performs horribly and the share price plummets, while normal investors will lose everything."
Trump already has a good idea how this works, because, as CNBC noted in 2020, former Trump adviser Gary Cohn put together a SPAC worth a potential $600 million (and $120 million directly to Cohn) when it formed a "blank check" holding company whose entire purpose seems to be simply to get people to buy into shares. A SPAC of this variety is nothing more than a exchange-based Ponzi scheme in which the original Ponzi is guaranteed to walk away with a mountain of cash.
TMTG isn't a social media platform. It's a scam. Trump doesn't need another social media platform. He needs suckers willing to buy stock. And Trump has always been very, very good at locating suckers.
So while it's fun to point out that TRUTH Social has some of the most restrictive rules of any platform, including rules that prohibit criticizing TRUTH Social, it doesn't really matter. The whole platform can be sh#t pigs all the way down. It can collapse under its own incompetence. None of that means a thing. What matters to Trump is that he gets to walk away with a bundle.
Not every SPAC is a scam. They really can be a means of quickly connecting investors to rising companies that aren't yet at a stage that would allow them to get onto the exchange through more traditional means. But of the $82 billion raised through SPACS in 2020, a large amount is either super speculative investment or an outright scam. Which lead the Harvard Business Review to note last February that the SPAC bubble was looking very fragile. Once it became clear that this was a way to drub investors for ready cash, everyone wanted in.
Trump isn't being innovative in his technology. He's not even being innovative in his scam. In a lot of ways, he's late to the SPAC party. But it's way past time for the SEC to put some serious restrictions on these backdoor listing schemes and blank check companies.
Former President Donald Trump on Wednesday announced he's launching a new social media platform, named "TRUTH Social," that he said is meant to "fight back" against "Big Tech," which he accused of trying to "silence opposing voices in America."
But ironically, given the name of the operation, the terms of service that users must agree to in order to join the platform state that users cannot "disparage, tarnish, or otherwise harm, in our opinion, us and/or the Site."
That means the rules of the purportedly anti-censorship platform include a clause censoring its users.
That day, as insurrectionists broke into the U.S. Capitol building in an attempt to stop the transfer of power from Trump to President Joe Biden, violently attacking law enforcement as they did so, Trump tweeted a video praising them.
"I know your pain, I know you're hurt, we had an election that was stolen from us, it was a landslide election and everyone knows it, especially the other side, but you have to go home now," Trump said in the video as the insurrection was ongoing and lawmakers and staff in the Capitol were hunkered in safe rooms and hiding in offices from the mob. "We love you. You're very special."
Twitter has said his ban is permanent, but Facebook plans to take another look at whether to allow Trump back on its platform in 2023. YouTube said in March that it will let him back on if it determines that there has been a decrease in the threat of "real-world violence."
"I created TRUTH Social ... to stand up to the tyranny of Big Tech," Trump said in the release announcing his new site. "We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable. I am excited to send out my first TRUTH Social very soon."
Over his four years in office, the Washington Post tallied at least 30,573 "false or misleading claims" made by Trump, an average of 21 per day.
Published with permission of The American Independent Foundation.