Echo Wang and Krystal H

(Reuters) – Donald Trump’s social media deal partner took advice from a group of China-based businessmen who in the past tried their hand at businesses ranging from Spanish wine to Korean women’s fashion, and at one point had their “integrity” questioned by U.S. regulators.

The financiers – Abraham Cinta, Sergio Camarero, Carlos Lopez and Jesus Emilio Hoyos Quintero – are managing partners of ARC Group Ltd, a Shanghai-based investment bank listed in a regulatory filing as a financial adviser to Digital World Acquisition Corp, the shell company merging with the former U.S. President’s venture.

Patrick Orlando has been the public face of Special Purpose Acquisition Company (SPAC), and is its chief executive. Digital World claimed that ARC was an adviser with contacts in the investment, government and advisory sectors and could help them “get to quality deals pipeline”.

An examination of regulatory filings reveals that ARC had been involved in SPAC formation, in particular over the past 2 years. But its executives were in trouble with U.S. Securities and Exchange Commissions (SEC), in 2017. The regulator sought to block three initial public offerings by companies where four of its leaders were involved. It accused them of misrepresenting and misstating their connection, the nature of their businesses, as well as failing to cooperate and collaborate with regulators.

According to regulatory filings, the executives failed to appear at hearings and a judge issued default judgment in favor of regulators. The result was a rare so-called stop order, which prohibited the executives from taking their companies – Go EZ Corp, Arc Lifestyle Group Inc and Nova Smart Solutions Inc – public.

Go EZ sold smartphone accessories, Arc Lifestyle sold products such as designer apparel, Spanish wine and olive oil, and Nova’s business included drone development and corporate staffing service, according to the filing.

The Respondents have failed to respond, fail to appear at the hearing or any other defense of the proceeding”, wrote Cameron Elliot (an SEC Administrative Law Judge). These actions “reveal the integrity of management.”

Elliot is an administrator law judge at U.S. International Trade Commission and told Reuters that he didn’t have additional information.

Camarero was the CEO of Nova Smart and one of the managing partner of ARC Group. Camarero, one of the managing partners at ARC Group, stated that he worked with regulators by answering their calls and providing them his emails. He said he could not fly to Washington for business and personal reasons when asked by regulators.

In an email, he stated that “the process was becoming very difficult and consuming my times.” He claimed that he had decided to privately run the company but was forced to dissolve it. “Obviously, it was me as collateral damage,” he stated.

Camarero was noted in the ruling that he had provided documents, participated in phone conversations and made them available. However, he declined to testify in the United States. Cinta Lopez, Quintero, and the CEO of Arc Group did not reply to inquiries for comment. A spokesperson for the SEC also declined to comment.

Reuters could not determine what Trump or his company, Trump Media & Technology Group, knew of the ARC Group bankers’ involvement in Digital World or their past troubles with regulators.

Trump Media & Technology Group and Digital World did not respond to requests for comment. Orlando has not responded to any requests for comment. He was also involved in at least three additional special-purpose acquisition companies.

The SEC has only issued five stop orders since 2004 when the case was brought against the ARC executive.

Christina Thoma is a Mayer Brown LLP partner and a former senior advisor to the SEC. She called the “extreme” move.

According to her, most enforcement actions taken against companies because of materially false disclosures don’t lead to a stop order. The SEC is able seek various penalties. Perrie Weiner is a Baker McKenzie securities litigation lawyer. She said that the judgement could be an issue in the event the executive ever becomes the subject of another SEC investigation or investors lawsuits.

Weiner pointed out that there was no finding of fact in the case against the dealmakers. “It’s like if you get a moving violation and don’t show up for your court hearing, and they issue a judgment against you for non-appearance and non-cooperation.”

GLOBAL EXPANSION

ARC Group has prepared investor presentations and regulatory filings that show the firm’s success in the recent years. They have helped clients to overcome the investment obstacles into the United States created by Donald Trump for Chinese investors.

According to its website, the company opened up to fifteen offices worldwide and completed $1.8 million of deals. According to an investor presentation, it also claimed that the firm created or advised over 30 SPACs. The vast majority were located in the United States.

Digital World shares rose more than 600% after the deal was completed a week ago. ARC Group seized the opportunity to advertise its China operations. Last week, it sent a Mandarin translation of a Reuters article on the merger to its subscribers on WeChat’s Chinese messaging app.

Trump’s business merges with SPAC. Our shares rose 400%!” The article was written.