This illustration shows a photo of former President Donald Trump next to a phone screen displaying the Truth Social app, in Washington, D.C., on February 21, 2022.
Stephanie Reynolds | AFP | Getty Images
Investment firms led by the former CEO of a SPAC that merged with Donald Trump's media company claim their files were hacked and stolen by a current member of the media company's board.
In a federal civil lawsuit filed in South Florida last month, the companies accused board member Eric Swider of plotting a coup in early 2023 to replace Patrick Orlando as CEO of the SPAC, Digital World Acquisition Corp.
As part of that takedown attempt, Swider and others allegedly “stole access” to the companies' computer systems and then “used the stolen information to attack” Orlando.
It was an “aggressive scheme to control and expand their holdings,” says the lawsuit, filed by Benessere Investment Group and ARC Global Investments II.
The lawsuit seeks damages and an injunction “to prohibit the use of the stolen information and to prevent the defendants from hacking” the companies' files.
Orlando was fired from Digital World in March 2023 and was replaced by Swider.
Last month, this blank check company completed a merger Trump Media and Technology Group Public, allowing it to trade on the Nasdaq Stock Exchange. The company, which owns the Trump-focused social media app Truth Social and trades under the ticker DJT, rose in its stock market debut but has since erased all those gains and more.
On Wednesday alone, the stock price fell nearly 9%. Since April 1, the stock has lost nearly 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 difficult path toward an IPO, and its equally turbulent first weeks as a public company.
DWAC in July settled fraud charges with the Securities and Exchange Commission, even though the agency found that the SPAC made “materially false and misleading” filings.
In late March, Trump Media filed a lawsuit against its founders over allegations of mismanagement of the merger, and seeks to prevent them from owning the company's shares.
These founders have filed a lawsuit against Trump Media in Delaware Chancery Court over their stake in the company.
Meanwhile, critics have called 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 belonging to Swider and Cano did not immediately receive responses.
In an interview with Wired magazine, which first reported the lawsuit earlier Wednesday, Swider denied all of the accusations against him.
“I think he's never gotten over the fact that I replaced him,” Swider told the outlet. “I don't know why he's so offended.”
The alleged hack
The lawsuit in Florida, which was filed shortly before the merger in late March, presents Orlando as successful in its efforts to have DWAC enter into a merger agreement with Trump Media.
The suit alleges that Swider misled DWAC directors and business partners by publishing “false and misleading representations of what was happening” at the company.
He also allegedly “offered significant compensation to other managers he recruited to collude with him in exchange for supporting his coup.”
Swider was seeking to significantly increase his compensation by joining as DWAC's CEO — but he also wanted control of ARC II, which owned about 19% of DWAC before the merger, according to the lawsuit.
Trump Media said in an April 1 regulatory filing that ARC II owns 6.9%, or about 9.5 million shares, of the post-merger company.
Information about ARC II was kept in an account on an electronic file storage site owned by Benessere, the suit says.
To access the account, which “stores the lifeblood” of both investment firms, Swider allegedly recruited former Orlando assistant Alexander Cano, one of the defendants in the lawsuit. The companies accuse Swider of promising to make Kanu president of DWAC in exchange for access to the account.
A woman uses her phone in front of screens displaying trading information about shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, US, March 26, 2024.
Brendan McDiarmid | Reuters
Cano agreed, and Swider “kept his promise,” while also presenting Cano with a convertible warrant worth 165,000 shares of DWAC stock — an award valued at more than $6 million at the time, the lawsuit alleges.
Orlando voted for Cano's award, Swider said in an interview with Wired, adding that he never hired Cano as his assistant, as the suit alleges.
Since February 2023, Cano repeatedly accessed the storage account and “immediately” provided information in it to Swider, the lawsuit says.
Swider then used it to email “false and defamatory claims” about Orlando to ARC II members.
In a March 5 email, included in the lawsuit as “Exhibit A,” Swider accused Orlando of “failing to maintain fiduciary responsibility” to ARC II, among a series of other claims.
“Patrick has threatened me with a pending lawsuit 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'm sure he's a great human being, honest, hard working. He looks out for your best interests. He's good looking. He's great. I love him. Nothing in this email is meant to be defamatory. He's been great as a leader. Patrick- you're amazing!! “
Orlando later discovered the email because Swider “failed to remove Orlando's wife from the mailing list,” according to the lawsuit.
