This photo illustration shows an image of former President Donald Trump next to a phone screen displaying the Truth Social app, in Washington, DC, February 21, 2022.
Stefani Reynolds | AFP | Getty Images
Investment firms run 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 suit filed in South Florida last month, the companies accuse board member Eric Swider of plotting a coup in early 2023 to replace Patrick Orlando as CEO of the company. special purpose acquisition company, Digital World Acquisition Corp.
As part of the attempted ouster, Swider and others allegedly “stole access” to the companies’ computer systems and then “used the stolen information to attack” Orlando.
It was “an audacious plan to take control and expand their holdings,” claims the complaint filed by Benessere Investment Group and ARC Global Investments II.
The suit seeks damages and an injunction “prohibiting the use of the stolen information and preventing defendants from hacking” into the companies’ files.
Orlando was fired from Digital World in March 2023 and replaced by Swider.
This blank check company finalized a merger last month to take Trump Media & Technology Group Corp. public, allowing it to be traded on the Nasdaq. The company, which owns the Trump-centric social media app Truth Social and trades under the ticker DJT, soared in its stock market debut but has since erased all those gains and more.
On Wednesday alone, the stock price fell almost 9%. Since April 1, the stock has lost nearly 45% of its value.
The Florida lawsuit is just one in a series of complicated and dramatic legal disputes that have come to define Trump Media’s rocky path to an IPO, as well as its equally turbulent first weeks in as a public company.
In July, DWAC settled fraud charges with the Securities and Exchange Commission, although the agency found that the SPAC had submitted “materially false and misleading” documents.
In late March, Trump Media sued its co-founders for alleged mismanagement of the merger and is seeking to bar them from owning the company’s stock.
These co-founders sued Trump Media in Delaware Chancery Court over their stake in the company.
Critics, meanwhile, called the company a meme title and a “scam.” They highlight 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 president of DWAC, were not immediately responded to.
In an interview with Wired, which first reported on the lawsuit on 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 this offends him so much.”
The alleged hack
The Florida lawsuit, filed shortly before the late March merger, portrays Orlando as a success in its efforts to get DWAC to enter into a merger deal with Trump Media.
It alleges that Swider misled DWAC’s directors and business partners by publishing “false and misleading statements about what was happening” at the company.
He also allegedly “offered disproportionate compensation to other administrators he had enlisted to collaborate with him in exchange for their support of his coup.”
Swider was willing to massively increase his compensation by becoming 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, in an April 1 regulatory filing, reported that ARC II owned 6.9%, or about 9.5 million shares, of the post-merger company.
Information about ARC II was maintained in an account on an electronic file storage website owned by Benessere, the suit says.
To access the account, which “stores the lifeblood” of the two investment companies, Swider allegedly called on 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 displaying trading information on shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York, 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 reward valued at more than $6 million at the time, according to the suit .
Swider said in the interview with Wired that Orlando voted for Cano’s award, adding that he never hired Cano as an assistant, as the suit claims.
The lawsuit says Cano, since February 2023, repeatedly accessed the storage account and “immediately” provided the information in it to Swider.
Swider then used it to send “false and defamatory allegations” about Orlando to ARC II members.
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 to other members, so I want to be clear about that. I am not disparaging Patrick,” Swider wrote in the email.
“I’m sure he’s an amazing, honest, hard-working human being. He looks out for your best interests. He’s handsome. He’s cool. I like him. Nothing in this email is meant be defamatory. He has been great. as a leader. Patrick, you are great!!”
Orlando later discovered the email because Swider “failed to remove Orlando’s wife from the mailing list,” according to the lawsuit.
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