‘Just need to keep the black swan out of the picture’: Ousted CEO sued by Trump’s Truth Social company now hit with securities fraud case

The “terminated” CEO and board chairman of Digital World Acquisition Corp. (DWAC), a so-called “blank check” special purpose acquisition company (SPAC) that went on to complete a merger with Trump Media & Technology Group (TMTG), taking Donald Trump’s Truth Social company public, was hit with a securities fraud case on Wednesday.

The Securities and Exchange Commission (SEC) alleges that Patrick Orlando “engaged in deceptive conduct” in several ways, misleading investors with what he did and did not say months before DWAC’s initial public offering (IPO) and years before the merger was completed in March 2024.

“In the spring of 2021, Orlando planned and executed a scheme to use DWAC, which had not yet had its IPO, to pursue a merger with TMTG. Orlando discussed his scheme with at least one individual at TMTG,” the complaint said. “As part of this scheme, Orlando signed Forms S-1 in the spring and summer of 2021 that falsely and misleadingly stated that DWAC had not selected any merger target or engaged in any substantive discussions with any merger target. These Forms S-1 were filed with the Commission on DWAC’s behalf.”

A New York Times report from October 2021 raised questions about whether DWAC had “skirted securities laws and stock exchange rules” by planning a merger with TMTG before the IPO, and the SEC subsequently charged DWAC for those misrepresentations, leading to an $18 million settlement agreement.

Back in March, Trump sued Orlando alongside former contestants of “The Apprentice” Wesley Moss and Andrew Litinsky. Trump accused the latter two men of subjecting Truth Social to ridicule of a “hostile press” and damaging the company by leading it down the path of SEC and DOJ investigations by approaching Orlando’s Benessere Capital to serve as a SPAC, ultimately delaying a merger.

The SEC complaint against Orlando, whose sister was murdered in a New York hotel in 2010, recounted communications he allegedly had in April 2021 about two different plans — Plan A and Plan B in court filings — to execute a merger. One of those plans, seemingly the one involving Benessere Capital received pushback:

42. On April 18, 2021, four days later, a representative of Investment Bank sent a message to Orlando and wrote, “We do Trump one way or other. Now let’s sign up Trump. That’s the way to get the most $$$. Anyhow, we’ll figure it out. Opciones hay.” The last sentence of the message roughly translates to “There are options.” Orlando responded, “Yes. Done this week.”

43. Also on April 18, 2021, Orlando exchanged messages with Individual X and referred to a meeting scheduled for April 20, 2021 at the offices of TMTG’s outside counsel. Individual X wrote, “We will get this done!” Orlando responded, “It is done. Just need to keep the black swan out of the picture.” The “black swan” was a reference to one of the SPAC A officers who opposed a deal with TMTG.

Financial authorities alleged that there’s evidence of Orlando knowing the “rules we have to play by” but proceeding to violate the rules in several ways:

In the spring of 2021, Orlando engaged in deceptive conduct that would allow him to acquire a controlling interest in DWAC and take it public as a SPAC, with the goal of merging with TMTG. That conduct included, but was not limited to, the following: (1) he discussed this plan with TMTG officials even though DWAC was still pre-IPO; (2) he then entered into a letter of intent between himself, SPAC A, and TMTG that purported to link SPAC A and TMTG but, in reality, allowed SPAC A to pursue other targets and gave him the ability to bring DWAC to TMTG once its IPO was complete; (3) he orally informed certain investors who possessed necessary capital that he intended to use DWAC to acquire and merge with TMTG; and (4) he, along with the DWAC board, voted to direct DWAC to conduct preliminary conversations with potential “target” companies in September 2021 without any intention of moving forward, in part to conceal his preselection of TMTG. All the while, Orlando signed multiple public filings that falsely stated, among other misrepresentations, that DWAC had not selected a merger target and had not engaged in discussions with potential targets. Orlando carried out this deceptive course of business as part of a scheme to allow him to reap the financial benefit of the DWAC merger and avoid opposition from the SPAC A directors. Orlando’s scheme continued through the spring of 2022, when he continued to mislead investors through false statements and omissions in the Form S-4, which he signed.

Read the SEC complaint here.

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