Donald Trump Jr.’s Coronavirus Profiteering
Two penny stocks paid Donald Trump Jr. consulting fees. They now sell coronavirus equipment.
SG Blocks, a $20 million public company that repurposes shipping containers, is now distributing COVID-19 testing kits. In 2019, the company had seven full-time employees and its auditor wrote, “the Company has suffered recurring losses from operations and has negative operating cash flows and has stated that substantial doubt exists about its ability to continue as a going concern.”
Yet, SG Blocks is now offering to sell upwards of 10,000 coronavirus tests and is the “Official United States Osang Health Distributor” for coronavirus test kits.
How did this happen?
The answer might partially be explained by a consulting contract it paid to Donald Trump Jr. for “business development” advice.
In August 2012, SG Blocks entered into a two-year consulting agreement with Donald Trump Jr., in which he would consult on “matters relating to business development and provide advice on products and operations.” In exchange, Mr. Trump Jr. was granted options to purchase 1,000,000 shares of the SG Blocks common stock.
SG Blocks has other ties to the Trump administration. Howard Lorber, a longtime friend and fundraised for Donald Trump, is president and CEO of Vector Group. Vector Group was an 8% shareholder of SG Blocks in 2012.
In 2011, George Karfunkel owned over 5% of SG Blocks. Karfunkel is also a board member and large shareholder of Kodak and has received scrutiny over a potential loan Kodak is receiving from the U.S. government.
It is unclear to me whether Lorber or Karfunkel currently have an economic interest in SG Blocks.
Below is a screenshot from SG Blocks website about its newfound coronavirus test distribution:
A struggling seven-person company that was in the business of repurposing shipping containers is now a big coronavirus test distributor.
SG Blocks is not the only Trump Jr. affiliated company to pivot into coronavirus business.
COMSovereign Holding Corp, a small OTC traded company, describes itself as a “provider of technologically-advanced telecom solutions.” Now it is manufacturing face shields for coronavirus first responders.
In its 2019 annual report, COMSovereign’s auditor wrote, “the Company has experienced losses, negative cash flows from operations, has limited capital resources, and an accumulated deficit. These matters raise substantial doubt about the Company’s ability to continue as a going concern.”
COMSovereign’s pivot from 5G connectivity to manufacturing face shields is curious. On March 6, 2020, one week before President Trump declared coronavirus a national emergency, COMSovereign bought a plastics manufacturer. On March 31, 2020, COMSovereign boasted that its new division received an order for “high-volume production of face shields” and said, “The company anticipates net margin on the production to exceed $500,000 per month in the initial surge of production.” COMSovereign did not identify the buyer in its press release.
Like SG Blocks, COMSovereign has ties to Donald Trump Jr.
COMSovereign has its roots in a company called MacroSolve, a Tulsa-based tech company. In September 2011 MacroSolve signed a two-year deal with Donald Trump Jr. “for public relations and marketing promotion services.” In exchange, the company paid Trump Jr. a “one-time payment of $45,000 for the twenty-four month agreement … in addition to issuance of 5,000,000 shares of restricted common stock.”
According to minutes from an investor meeting at the Summit Club in Tulsa in 2012, MacroSolve’s Vice Chairman called the Trump Organization “our number one mobility partner” and introduced Trump Jr. saying, “he joins us today to explain why he sees a MacroSolve/Trump team as a winning combination.”
MacroSolve’s business declined and in 2014 and 2015 MacroSolve completed a series of transactions with a subsidiary it created and ultimately changed its name to Drone Aviation Corp. According to its SEC filings, Drone Aviation paid Michael Flynn, President Trump’s future National Security Advisor, $27,000 for his work as a board member between April 27, 2016, and December 31, 2016. In November 2019, Drone Aviation changed its name of incorporation to COMSovereign.
In his speech at the 2016 Republican National Convention Donald Trump Jr. said, “We are going to put Americans first — all Americans. Not a special class of crony elites at the top of the heap.” Tonight, Donald Trump Jr. is scheduled to speak at the 2020 Republican National Convention.
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