Federal prosecutors in New York involved in the criminal investigation into Donald Trump’s social media company last year started examining whether it violated money laundering statutes in connection with the acceptance of $8m with suspected Russian ties, according to sources familiar with the matter.
The company – Trump Media, which owns Trump’s Truth Social platform – initially came under criminal investigation over its preparations for a potential merger with a blank check company called Digital World (DWAC) that was also the subject of an earlier investigation by the Securities and Exchange Commission.
Towards the end of last year, federal prosecutors started examining two loans totaling $8m wired to Trump Media, through the Caribbean, from two obscure entities that both appear to be controlled in part by the relation of an ally of Russian president Vladimir Putin, the sources said.
The expanded nature of the criminal investigation, which has not been previously reported, threatens to delay the completion of the merger between Trump Media and DWAC, which would provide the company and Truth Social with up to $1.3bn in capital, in addition to a stock market listing.
Even if Trump Media and its officers face no criminal exposure for the transactions, the optics of borrowing money from potentially unsavory sources through opaque conduits could cloud Trump’s image as he seeks to recapture the White House in 2024.
The extent of the exposure for Trump Media and its officers for money laundering remains unclear. The statutes broadly require prosecutors to show that defendants knew the money was the proceeds of some form of unlawful activity and the transaction was designed to conceal its source.
But money laundering prosecutions are typically based on circumstantial evidence and can be based on materials that show that the money in question was unlikely to have legitimate origins, legal experts said.
The first $2m payment to Trump Media came in December 2021 when the company was on the brink of collapse after the planned merger with DWAC – that would have unlocked millions for the company – was delayed when the SEC opened an inquiry into whether the arrangement broke regulatory rules.
Trump Media needed a bridge loan to keep the company afloat. But it struggled to get financing until DWAC’s chief executive Patrick Orlando sourced a $2m loan wired from Paxum Bank registered in Dominica, according to the wire transfer receipt reviewed by the Guardian.
The wire transfer identified Paxum Bank as the beneficial owner, although the promissory note identified an entity called ES Family Trust as the lender. Two months later, an unexpected second $6m payment arrived in Trump Media’s account from ES Family Trust, the transfer receipt showed.
In both instances, Orlando declined to provide details about the true identity of the lenders or the origin of the money to Trump Media executives, Trump Media’s since-ousted co-founder turned whistleblower Will Wilkerson recounted in an interview.
Though the two payments to Trump Media ostensibly came from two separate entities – first Paxum Bank and second ES Family Trust – the trustee of ES Family Trust, a person called Angel Pacheco, appears to have simultaneously been a director of Paxum Bank.
The Russian connection, as being examined by prosecutors in the US attorney’s office for the southern district of New York, centers on a part-owner of Paxum Bank – an individual named Anton Postolnikov, who appears to be a relation of Putin ally Aleksandr Smirnov.
Smirnov, who heads the Russia-controlled maritime company Rosmorport, worked in the Central Office of the Russian government until 2017. Before that, Smirnov was the first deputy minister of justice of Russia until 2014, and for most of Putin’s first two terms as president, Smirnov served in the executive office of the president.
A spokesman for the justice department, the US attorney’s office for the southern district of New York and outside counsel for Trump Media declined to comment about the investigation. Rosmorport and Paxum Bank did not respond to requests for comment.
The obscure origins of the $8m loans caused alarm at Trump Media and, in the spring of 2022, Trump Media’s then chief financial officer Phillip Juhan weighed returning the money, according to Wilkerson.
But the money was never returned, Wilkerson said, in part because losing $8m out of the roughly $12m cash that Trump Media had in its accounts at that time would have placed significant stress on its financial situation.
Prosecutors appear to have also taken a special interest in the payments because the off-shore Paxum Bank has a history of providing banking services for the pornography and sex worker industries, which makes it higher risk of engaging in money laundering and other illicit financing.
There appears to have been some awareness at Trump Media that the first $2m was to come through because Trump’s eldest son Don Jr, who joined the board with Trump ally Kash Patel and former Republican turned Trump Media chief executive Devin Nunes, had confirmed to the company’s lawyers to proceed with the transaction.
“Just want to keep you in the loop – no guaranty that these will get signed and funded, but we remain hopeful,” John Haley, outside counsel for Trump Media said in a 24 December 2021 email seen by the Guardian, to which Don Jr replied: “Thanks john much appreciated. d.”
Since Orlando, who arranged the $8m financing, is an SEC-licensed broker-dealer, he would be subject to SEC rules governing anti-money laundering and “Know Your Customer” requirements that mandate due diligence of investors to combat the proliferation of illicit money.
As a private company arranging private loans, the obligations for Trump Media to vet the financing under the SEC rules are less clear. But the securities regulations are separate to the US criminal money laundering statutes, which apply universally.
A spokesman for Don Jr declined to comment. Orlando, Nunes, Patel and Juhan did not respond to requests for comment.
Federal prosecutors’ interest in the two payments appears to have started when Wilkerson, through his attorneys Patrick Mincey, Stephen Bell and Phil Brewster, alerted the US attorney’s office for the southern district of New York to the payments on 23 October 2022.
Trump was the chairman of Trump Media at the time, though it was unclear whether he was aware of the opaque nature of the two loans. Trump typically did not seem to be particularly interested in managing the day-to-day running of Trump Media, Wilkerson said.
But Trump was interested in the deal, Wilkerson said, because he got to own 90% of the shares without putting any money into the company. According to one source familiar with the matter, however, Trump invested some money into DWAC, which could allow him to cash out twice in the event the merger was consummated.