A Peruvian, a Brazilian "prince" and a Mexican in China: the partners of Trump's new media venture

Last week a previously unknown company announced it was launching a social media platform with former president Donald Trump in a deal valued at $1.7 billion.

The company, which had previously not done any business saw its stock soar almost 1,000 percent when word spread Friday of the connection to Trump, drawing comparisons to GameStop’s stunning stock market leap in January this year.

If successful, the deal could make Trump a billionaire – again. But many hurdles remain.

The merger will need to get government approval before it can officially launch. Regulators will take a hard look at how the two companies came together using a financial mechanism known as a ‘Special Purpose Acquisition Company’, or SPAC, an increasingly popular tool for launching public companies through what is known as ‘blank check’ financing.

But they’ve also drawn regulatory scrutiny and the scorn of investors who suffered losses.

Market watchers are also curious about why Trump went into business with a little-known Miami businessman, Patrick Orlando, a Brazilian self-declared ‘prince’, Luiz Orleans e Braganca, and their Mexican partner, Abraham Cinta.

Trump’s new media company

Trump has been pitching his new social network - Trump Media & Technology Group (TMTG) – launched in February, as a potential rival to Twitter and Facebook which recently blocked him from their platforms due to his consistent spreading of dangerous disinformation about covid-19 and the 2020 election. In addition to creating a social media network, TRUTH Social, the company plans to have a subscription streaming service spanning news, entertainment and podcasts.

In a statement, Trump said he created TMTG “to stand up to the tyranny of Big Tech.” He added: “We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced,” Trump said in a statement.

Trump Org did not immediately respond to a request for comment.

What is a SPAC?

SPACs are companies that raise money with a ‘blank check’ then quickly take a private company public in a way that byes the traditional public stock offering, or IPO (Initial Public Offering).

Managers of SPACs can create a pot of money and identify the sector they are interested in investing in but cannot make prior insider agreements with individual companies. After they are formed they have a two-year window to identify partner companies and complete their mergers.

The merger with Trump Media was agreed at surprising speed. Under the securities rules governing SPACS, the company had to prove that it had no acquisition goals in mind as of its Sept 2 IPO.

SPACS were created originally to help small companies who lack the legal, ing and banking resources of large companies better able to handle cumbersome regulations. SPACs typically face fewer regulatory requirements than a traditional IPO, but the Securities and Exchange Commission (SEC) has been looking at tightening the rules after a series of company collapses that raised questions about adequate protection for small investors.

Some experts are asking why Trump use a SPAC to fund his new venture. Trump’s reputation since leaving the White House and returning to public life has failed to attract interest from major banks and financial funds. The Trump Organization is also facing mounting losses at some businesses and a criminal indictment of its chief financial officer, Allen Weisselberg. The SPAC allows Trump to raise money from an alternative source, tapping into his political popularity.

The dramatic stock rush for the Digital World SPAC was likely fueled by retail investors driven by Trump’s large political base, experts say. But, they warn the new company will now have to build a successful media company to fulfill the hype, assuming it first gets SEC approval.

Several major major funds pulled out of the SPAC last week upon learning of the merger with Trump's company. One of them, Lighthouse Partners, told Univision said it was "not aware of the pending merger and no longer holds unrestricted shares of the SPAC.”

Who is behind Trump’s SPAC partner?

The financier running Digital World Acquisition is Patrick Orlando, a Peruvian businessman based in Miami with two degrees from MIT who specializes in SPACs.

Orlando is the CEO of Benessere Capital LLC, an investment consulting and investment banking firm he founded in Miami in October 2012. He is also CEO of Yunhong International, another SPAC located in an office building in Wuhan, China, according to SEC filings, which offers nutrition supplements.

Orlando previously served as Chief Technology Officer of Pure Biofuels Corporation, a Peruvian venture that raised millions of dollars from investors to fund the construction of a biodiesel processing plant whihc was later bought by Texas petrochemical company Valero.

Before that, Orlando was Director of Emerging Markets Derivatives at Deutsche Bank, a firm that served as the primary lender for the Trump Organization.

It is not clear how he teamed up with Trump in the SPAC merger.

Orlando didn’t reply to an email requesting an interview.

DWAC's Chief Financial Officer is Luiz Philippe de Orleans e Braganca, according to SEC documents, a member of Brazil’s national congress and self-proclaimed Brazilian heir to the former monarchy that was overthrown in 1889.

Philippe received his Masters from Stanford University and previously worked for a New York City-based investment bank.

After the merger, he posted a photo with Trump on Instagram.

Mexican partner

One of the architects of the merger is Abraham Cinta, a Mexican businessman living in China who has worked on several deals with Orlando, according to SEC financial documents.

Cinta’s firm, ARC Group Ltd. has offices in Shanghai and Wuhan, as well as Mexico City, Miami, and Singapore, according to its website.

Cinta has helped over a dozen companies list in the U.S., and has been involved in more than $2 billion of deals, according to a biography posted on a private equity conference website. He studied international business istration at the private Universidad de las Americas in Puebla, Mexico, and the University of Wales in the United Kingdom. He previously worked at Mexico’s welfare ministry, the biography shows.

He has started several SPACs with Cinta.

In 2017, the SEC suspended one of Cinta's companies for alleged “untrue statements of material facts” regarding the operations of Arc Lifestyle Group and an executive office in Miami that was nothing more than a mailbox.

The SEC said Cinta, and other business partners, purported to run several businesses selling Korean designer apparel, Spanish wine and olive oil. “Arc’s registration statement makes several misstatements that create
“the false appearance of operations around the world and within the United States.”

It concluded that Arc had no current inventory of olive oil to sell and “had no genuine intent to develop its planned principal operations at the time the registration statement was filed.”

What next?

The Digital World SPAC must now publicly release an S-4 regulatory filing with the SEC containing financial information and the ownership structure of Trump’s new venture. Under the merger, the SPAC will own about 15-20% of the new company, leaving Trump holding the rest.