Rocket One Capital is an obscure private equity firm with no obvious connection to the transaction beyond a board member.
The Miami-based private equity firm is one of only two companies identified by name in a regulatory filing. The chief investment officer of Rocket One was a board member.
After Digital World became aware that all of its directors had received subpoenas, Garelick resigned from the board. There have been no resignations.
Digital World said in the filing that the grand-jury probe could delay or upend its plan to merge with Trump's media venture. It is not known what information the grand jury is seeking on Rocket One, and the private equity firm's relevance to the probe beyond Garelick's dual roles is a mystery.
More insight into some of the entities and people in the Trump Media transaction can be found in a deeper look at rocket one.
There was no allegation of wrongdoing against Garelick or Rocket One. The private equity firm is not well known. According to documents and interviews with people in the marijuana industry, Garelick is closely involved with a technology known as cashless ATMs.
The software that resides on point-of-sale devices helps cannabis dispensary work around the banks that don't want to deal with them because of federal law. Credit-card processor scrutiny of the legal gray area has arisen from that. There is no indication that the questions about Rocket One are related to the ATM business.
Digital World and Trump Media didn't respond to questions. Trump Media said in a statement that it will comply with subpoenas it has received.
There is a website that is currently down. A few months ago, the site described the firm as specializing in investments in fintech, adtech, entertainment, and commercial and residential real estate. High Risk Commerce is a payment technology company that serves businesses that are high-risk to banks.
According to the Businessweek investigation, Rocket One's top executives have been involved in ATMs that don't have cash.
Transact First played a role in the cashless ATMs.
Records from the year 2020 show that Michael Shvartsman is a director or officer of Transact First. It is a public record of Transact First. Downtime or capacity problems have been cited on the company's website for months, but in early 2021.
Multiple cannabis industry participants described Transact First as a major provider of such transactions, and Shvartsman was the main representative for Transact First. A lawyer for Shvartsman who returned new calls about the investigation that seeks information on Rocket One declined to comment.
A call to Rocket One's phone number in Miami was answered by a company called Foundation Capital. Shvartsman's occupation is listed as founding partner of Foundation Capital, a venture capital and private equity firm that is unrelated to the California firm.
There is a gray area in which cashless ATMs exist. There is a gap between state law that allows licensed cannabis sales and federal law that considers marijuana an illegal substance. More than a quarter of the $28 billion in dispensary sales this year will be processed by them.
They have created a lucrative niche in the world of high-risk payments because they charge a high price.
Many of them make marijuana purchases look like cash withdrawals from ATM machines to the banks that process them, which is a legal problem. Anti-money-laundering controls require banks to know what and who they are working with. Mastercard and Visa want such transactions off their networks.
Many banks cover out-of-network cash-withdrawal fees for their customers, according to an investigation by Businessweek.
Shvartsman was described on the website as a shareholder and partner in multiple companies with financial valuations in the hundreds of millions of dollars.
A person in the cannabis industry, who asked not to be identified for fear of jeopardizing relationships with providers, said that after rejecting Transact First's payment solution, the person accepted a meeting with Rocket One at a marijuana convention in Las Vegas. The person said that Shvartsman and Garelick were at the meeting.
Dutchie owns LeafLogix, a company that provides technology for the cannabis industry. He was with LeafLogix for over a year before he joined Rocket One. When Dutchie was talking about acquiring it, Garelick wasn't employed at LeafLogix. When the acquisition took effect, Dutchie "sunsetted" all LeafLogix payment solutions, according to the spokesman.
The grand-jury subpoenas and underlying investigations by the US Justice Department and the Securities and Exchange Commission were disclosed by Digital World.
Digital World is a publicly traded company that wants to quickly get a startup onto a stock exchange. A public listing would allow Trump to raise capital from his supporters.
Digital World, run by a Florida man, was advised on the deal by a Chinese company that helps foreign companies list their stock in the US. There was only one other corporate entity named in the report. The SEC has subpoenas for ARC Capital. The filing didn't say if the Chinese financial advisory firm was included in the federal grand jury probe.
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