Trump SPAC deal leads to fraud lawsuit
Private equity investor Brian Shevland is suing the CEO of the blank check company that it merging with former President Trump's social media platform, claiming a "brazen act of fraud."
Big picture: The lawsuit comes just a week after Digital World Acquisition Corp. (DWAC), led by Patrick Orlando, disclosed that it's under investigation by federal securities regulators. It also comes several months before Trump's company is slated to launch its first public products.
- Shevland was an early director nominee of DWAC, but claims in his lawsuit that he was removed by Orlando without warning or notification — a move that denied him thousands of shares and the ability to buy more stock at a very low price.
- For example, one remedy proposed by Shevland is for him to be able to buy shares at $0.003 a piece, compared to the SPAC IPO price of $10 and the current market price of $51.33.
The intrigue: The complaint suggests that conversations between Orlando and Trump began months before DWAC went public, which could violate federal securities law.
- It also said that DWAC originally planned to pass on the Trump deal "due to opposition from board members who rejected an affiliation with former President Trump for personal reasons."
- Shevland, the complaint says, supported the transaction.
Read the complaint: