Trump's Truth Social company files lawsuit in Sarasota County

The road to a merger of two companies that could net Donald Trump a windfall of over $3 billion was rocked by accusations of impropriety and sabotage, the extent of which is detailed in a lawsuit filed in Sarasota County.

Shareholders on Friday voted to approve a merger between Trump Media & Technology Group – the parent of social media platform Truth Social – and a company called Digital World Acquisition Corp., or DWAC.

As a result of the merger, TMTG – based on Cattlemen Road in Sarasota – will soon begin trading on the Nasdaq stock market and Trump could profit substantially at a time when he owes more than $500 million in legal fines.

The merger vote was delayed by problems for years, including scrutiny by the Securities and Exchange Commission and the U.S. Department of Justice, rendering Friday's vote crucial to Trump's financial portfolio as the 2024 election approaches.

Digital World Acquisition Corp. (DWAC) and Trump Media & Technology Group Corp. (TMTG) are suing Arc Global Investments II LLC and Miami businessman Patrick Orlando in Sarasota County Court. It is one of four lawsuits involving Trump's media company filed in the country.

TMTG and DWAC filed a five-count amended complaint against Arc Global and Orlando on March 17. Sarasota County Circuit Court Judge Hunter Carroll is overseeing the case.

The lawsuit alleges, among other things, that Orlando conducted a "blatant shakedown extortion effort" by using his ability to kill the merger as leverage to maximize his stake that could be worth $222 million in stock, and that he also attempted to convince shareholders to vote against the merger.

Digital World Acquisition Corp. is a special purpose acquisition company, also known as a SPAC. A SPAC is a public company created to acquire an existing targeted company.

DWAC was formed on December 11, 2020.

As a result of Trump being banned by Twitter for his role on Jan. 6, TMTG was formed two months later.

Arc Global, meanwhile, is DWAC's sponsor and is controlled by Orlando, who is a managing member of Arc.

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Orlando was also CEO of DWAC until he was removed by the board in March 2023. He remains on the DWAC board, though the lawsuit alleges he is refusing to resign unless the company provides him with shares and stock options potentially worth $222 million.

As a closing condition of the merger, the lawsuit says, Orlando is required to resign. Orlando could not be reached for comment.

On Oct. 20, 2021, DWAC and TMTG announced they had entered into a merger agreement and problems soon followed.

The Securities and Exchange Commission and Department of Justice investigated and found Orlando "communicated his desire for DWAC to merge with TMTG" even though "SPACs are not permitted to have premeditated merger targets,’’ according to the lawsuit.

DWAC reached an $18 million settlement with the SEC in July 2023 to be paid once the merger is complete. The Sarasota County lawsuit claims shareholders incurred an additional $10 million in legal fees and damage to the brand's reputation. The investigations forced two scheduled shareholder votes on a merger to be extended as the deal faced possible collapse.

Orlando's "reckless and irrational" behavior, the lawsuit alleges, includes leaking details of the merger to the media, keeping invoices and contracts in his personal email account, and being responsible for the resignation of the company's auditor. The lawsuit also claims Orlando discouraged people from investing as revenge for being fired as CEO.

The SPAC spat between Trump's company and Orlando, which could have a major impact on Trump’s wealth, is a notable turnaround from 2021 when Orlando wrote Trump a gushing birthday letter telling the former president he was "unaware of the extent of your brilliance."

This article originally appeared on Sarasota Herald-Tribune: Merger of Trump's Truth Social company could save him financially