This photo illustration shows an image of former President Donald Trump next to a phone screen displaying the Truth Social app, in Washington, DC, on February 21, 2022.
Stefani Reynolds | Afp | Getty Images
Investment firms led by the former CEO of the SPAC, which merged with Donald Trump’s media company, claim their files were hacked and stolen by a current member of the media company’s board of directors.
In a federal civil lawsuit filed in South Florida last month, the companies accuse board member Eric Swider of planning an early 2023 coup to replace Patrick Orlando as CEO of the special purpose acquisition company, Digital World Acquisition Corp.
As part of that ouster attempt, Swider and others allegedly “stole access” to the companies’ computer systems and then “used the stolen information to attack” Orlando, according to the indictment.
It was “an audacious plan to take control and expand their holdings,” alleges the lawsuit, filed by Benessere Investment Group and ARC Global Investments II.
The lawsuit seeks damages and an injunction that “prohibits the use of the stolen information and prevents the defendants from hacking” the companies’ files.
Orlando was fired from Digital World in March 2023 and replaced by Swider.
That blank check company last month completed a merger to undertake Trump Media & Technology Group Cor. public, allowing it to trade on the Nasdaq stock market. The company, which owns the Trump-focused social media app Truth Social and trades under the ticker DJT, soared in its stock market debut, but those gains have since been erased.
The stock price fell nearly 9% on Wednesday alone. Since April 1st the stock has lost almost 45% of its value.
The Florida lawsuit is just one of a series of messy and dramatic legal disputes that have come to define Trump Media’s rocky road to an IPO, and its equally turbulent first few weeks as a public company.
DWAC settled fraud charges with the Securities and Exchange Commission in July, although the agency found that the SPAC had filed “materially false and misleading” documents.
Trump Media sued its cofounders in late March for alleged mishandling of the merger and is seeking to bar them from owning shares of the company.
These cofounders sued Trump Media in Delaware Chancery Court over their stake in the company.
Critics, meanwhile, have labeled the company a meme and a “scam.” They point to the company’s reported net loss of $58.2 million on revenue of just $4.1 million in 2023.
Trump Media did not immediately respond to CNBC’s requests for comment on the lawsuit. Emails sent to addresses belonging to Swider and co-defendant Alexander Cano, former DWAC president, were not immediately responded to.
In an interview with Wired, which first reported the lawsuit late Wednesday, Swider denied all allegations against him.
“I just think he never let go [of] the fact that I replaced him,” Swider told the outlet. “I don’t know why it offends him so much.”
The alleged hacking
The Florida lawsuit, filed shortly before the late March merger, presents Orlando as successful in its efforts to bring DWAC into a merger deal with Trump Media.
It is alleged that Swider misled DWAC’s directors and business partners by publishing “false and misleading representations of what was happening” at the company.
He also allegedly “offered excessive compensation to other filmmakers he enlisted to collaborate with him in exchange for supporting his coup.”
Swider would have massively increased his compensation through his membership as CEO of DWAC, but he also wanted to take control of ARC II, which owned about 19% of DWAC before the merger, according to the lawsuit.
Trump Media reported in an April 1 regulatory filing that ARC II owns 6.9%, or about 9.5 million shares, of the post-merger company.
The information about ARC II was kept in an account on an electronic file storage site owned by Benessere, the lawsuit states.
To access the account, which “maintains the lifeblood” of both investment firms, Swider allegedly enlisted Cano, Orlando’s former assistant. The companies accuse Swider of promising to make Cano president of DWAC in exchange for access to the account.
A woman uses her phone in front of screens showing trading information about the stocks of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, the United States, March 26, 2024.
Brendan McDermid | Reuters
Cano agreed, and Swider “kept his promise,” while providing Cano with a convertible note worth 165,000 shares of DWAC — a prize valued at more than $6 million at the time, the lawsuit claims.
Swider said in the interview with Wired that Orlando voted for Cano’s award, adding that he never hired Cano as his assistant, as the lawsuit claims.
The lawsuit states that Cano since February 2023 repeatedly accessed the deposit account and “immediately” provided Swider with the information within it.
Swider then used it to email “false and defamatory statements” about Orlando to ARC II members, according to the lawsuit.
In a March 5 email — included in the lawsuit as “Exhibit A” — Swider accused Orlando of “failure to maintain a fiduciary responsibility” to ARC II, among a litany of other claims.
“Patrick has threatened me with pending litigation for speaking out to other season ticket holders, so I want to be clear about this. I am not disparaging Patrick,” Swider wrote in the email.
“I am sure he is an amazing, honest human being. He works hard. He looks out for your best interest. He is good looking. He is personable. I like him. Nothing in this email is intended to be defamatory. He has been fantastic as a leader. Patrick, you are fantastic!!”
Orlando later discovered the email because Swider “failed to remove Orlando’s wife from the mailing list,” according to the indictment.