A small North Carolina-based start-up backed by Donald Trump Jr.’s investment firm has scored a $620 million loan from the Pentagon, raising serious concerns about potential conflicts of interest within President Donald Trump’s administration.
Vulcan Elements, a rare-earth materials company with around 30 employees, will receive the loan as part of a broader $1.4 billion funding package to help build up the U.S. supply chain for magnets used in military technology.
The deal also includes more than $550 million in private funding and other government incentives.
The loan, which the Pentagon agreed to last month, is the largest ever made by its Office of Strategic Capital.
The announcement comes just three months after Trump Jr.’s venture capital firm, 1789 Capital, invested in Vulcan.
Political commentator Spencer Hakimian slammed the deal on X saying, “In a STUNNING display of CORRUPTION, Donald Trump Jr.’s company received $600,000,000 dollars from Donald Trump Sr.”
The message tapped into growing concern over whether the Trump administration is blurring the line between governance and family business.
Multiple Contracts Raise Ethical Concerns
This isn’t the first time companies tied to 1789 Capital have benefited from federal contracts.
According to the Financial Times, at least four firms backed by the fund have secured over $735 million in government deals this year. Some have also received regulatory relief.
“Presidents are expected to avoid even the appearance that they are using their office to financially benefit themselves or their family,” said Kedric Payne, general counsel at the Campaign Legal Center.
“While we do not know for certain if, or how, the president may have influenced this loan, it falls under the cloud of conflicts of interest we have seen throughout this administration.”
Critics argue that even if the loan was awarded through a legitimate process, the appearance of favoritism is hard to ignore, especially given 1789 Capital’s connections to major pro-Trump donors and the president’s own sons.
All Sides Deny Political Influence
Vulcan CEO John Maslin denied any impropriety. “This was not about political favors,” Maslin told the Financial Times.
“This was purely a merit-based process.”
He also said he had “zero contact with the president’s son,” and described Trump Jr.’s firm’s stake as “small” and without board or observer rights.
A Pentagon spokesperson said neither Trump Jr. nor 1789 Capital was involved “in any aspect of the conditional loan commitment discussions.”
A spokesperson for Trump Jr. echoed that, saying he had no role in negotiations with the government on behalf of any of 1789’s portfolio companies.
Trump Jr. has previously said that he is “very involved in the strategic decisions regarding where to invest our resources” at the fund.
Profiting From Policy
1789 Capital was founded in 2023 by conservative donors and now manages more than $1 billion in assets.
Since President Trump returned to office, the fund has invested in at least 22 companies, including some in sectors directly impacted by administration policies.
Those include defense tech, crypto, and AI. Notable examples are Firehawk Aerospace, which won over $10 million in Air Force contracts, and Cerebras Systems, which signed a $45 million deal with the Pentagon.
In October, drone maker Unusual Machines, in which Trump Jr. held a multimillion-dollar stake, secured its largest-ever defense contract.
In Vulcan’s case, the Pentagon loan also gives the Commerce Department a $50 million equity stake and provides warrants to both Vulcan and its partner, ReElement Technologies.
A Commerce Department official defended the deal, saying, “The upside for the taxpayer makes perfect sense.”
Vulcan says it expects to grow to 50 employees by year-end. The company plans to help boost the domestic magnet supply chain, which is essential for everything from drones to submarines.
“Every, every missile, every aircraft, every drone, every satellite — every piece of hardware that moves uses a rare earth magnet,” said Maslin.
Still, as more government dollars flow into companies linked to the Trump family, watchdogs warn that ethical lines may be blurring, whether or not anyone technically crossed them.