Investment firms led by the former CEO of the SPAC that merged with Donald Trump’s media company allege that 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 firms accuse board member Eric Swider of plotting a coup in early 2023 to replace Patrick Orlando as CEO of the special purpose acquisition cop, Digital World Acquisition Corp.
As part of that attempted ouster, Swider and others allegedly “stole access” to the firms’ computer systems and then “used the stolen information to attack” Orlando.
It was “an audacious scheme to seize control of and enlarge their holdings,” claims the suit, which was 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 to stop the Defendants hacking” the firms’ files.
Orlando was fired from Digital World in March 2023 and replaced by Swider.
That blank-check company last month completed a merger to take Trump Media & Technology Group Corp. public, allowing it to trade 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 of those gains and more.
On Wednesday alone, the share price fell nearly 9%. Since April 1, the stock has lost almost 45% of its value.
The Florida lawsuit is just one in 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 weeks as a public company.
DWAC in July settled fraud charges with the Securities and Exchange Commission, though the agency found the SPAC had submitted “materially false and misleading” filings.
Trump Media in late March sued its co-founders over alleged mismanagement of the merger, and is seeking to bar them from owning the company’s stock.
Those co-founders have sued Trump Media in Delaware Chancery Court over their stake in the company.
Critics, meanwhile, have labeled the company a meme stock 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 that belonged to Swider and co-defendant Alexander Cano, DWAC’s former president, did not immediately receive responses.
In an interview with Wired, which first reported the lawsuit earlier Wednesday, Swider denied all of the allegations against him.
“I just think he’s never let go [of] the fact that I replaced him,” Swider told the outlet. “I don’t know why it offends him so bad.”
The Florida lawsuit, which was filed shortly before the late-March merger, presents Orlando as successful in his efforts to DWAC into a merger agreement with Trump Media.
It alleges that Swider misled DWAC’s directors and business partners by publishing, “false and misleading representations of what was occurring” at the company.
He also allegedly “offered outsized compensation to the other directors he enlisted to collude with him in exchange for supporting his coup d’état.”
Swider stood to massively increase his compensation through his accession to CEO of DWAC — but he also wanted to take control of ARC II, which owned about 19% of DWAC prior to the merger, according to the lawsuit.
Trump Media in an April 1 regulatory filing reported that ARC II owns 6.9%, or about 9.5 million shares, of the post-merger company.
Information about ARC II was held in an account on an electronic file storage website owned by Benessere, the suit says.
To access the account, which “stores the lifeblood” of both investment firms, Swider allegedly enlisted Cano, Orlando’s former assistant. The firms accuse Swider of promising to make Cano the president of DWAC in exchange for access to the account.
Cano agreed, and Swider “made good on his promise,” while also providing Cano with a convertible note worth 165,000 shares of DWAC’s stock — an award valued at more than $6 million at the time, the suit alleges.
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 suit alleges.
The lawsuit says that Cano since February 2023 repeatedly accessed the storage account and “immediately” provided the information within it to Swider.
Swider then used it to email “false and defamatory claims” about Orlando to ARC II’s 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 out to fellow membership 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 Human being, Honest. hard working. Looking out for your best interest. He is good looking. He is cool. I like him. Nothing in this email is meant to be defamatory. He has been great as a leader. Patrick- you are Awesome!!”
Orlando later discovered the email because Swider “failed to remove Orlando’s wife from the mailing list,” according to the lawsuit.