William Wilkerson, the former senior vice president of operations for the company that owns Truth Social, the Twitter competitor launched by former President Donald Trump last year, has filed a Form TCR whistleblower referral with the Securities and Exchange Commission.
Wilkerson says Patrick Orlando, the head of Digital World Acquisition Corp. (DWAC), a special purpose acquisition company (SPAC), arranged to acquire Trump Media & Technology Group (TMTG) before Orlando had completed registration of the SPAC’s Form S-1 with the SEC, a violation of federal law.
“DWAC was still in the process of receiving SEC approval, yet [there were] substantive communications between DWAC and TMTG,” Wilkerson says in his August 28 whistleblower filing.
The SEC prohibits SPACs from arranging mergers before their S-1 is approved. The goal is to prevent private operating companies from using the SPAC as a back-door way to go public without having to meet financial disclosure requirements of a traditional initial public offering.
SPACs are publicly traded blank-check companies that have no source of revenue until they merge with a private operating company.
The allegation of Orlando talking with TMTG executives about the merger before Digital World was registered isn’t new; The New York Times reported the possible violation a year ago. But Wilkerson’s Form TCR filing substantiates what was up until this point a rumor.
The filing “details fraudulent misrepresentations,” Wilkerson’s attorneys say in the TCR referral. “He is the original source of extensive records” about the deal.
Allegations detailed
The SEC whistleblower program was created in 2010 to give corporate insiders an incentive to come forward if they believe executives have broken the law. The program provides a financial reward and a level of immunity to the person who comes forward if the allegations are proven true and prosecuted.
The SEC protects the anonymity of whistleblowers, but Wilkerson went public with his filing in a Washington Post report last week. The Post linked to Wilkerson’s Form TCR referral on its website.
“Hundreds of previously unreported company messages, documents, photos and audio recordings that Wilkerson has provided to the SEC in connection with a whistleblower submission … reveals a running portrait of the animosity that has built up inside Trump Media since its high-profile debut last year,” the Washington Post reported October 15.
Internal friction
In the Post report, Wilkerson details the rise of conflict between United Atlantic Ventures (UAV), the investment group that approached Trump about creating the media empire, and other parties to the deal, including Orlando’s SPAC and the Trump family.
The Form TCR filing details how TMTG originally intended to merge with a different Orlando SPAC, called Benessere Capital Acquisition Corp. (BENE), a $100-million fund that was already registered with the SEC and trading on Nasdaq.
After several meetings, TMTG, Orlando and Trump decided BENE didn’t have enough money to build the company as envisioned so talks shifted to DWAC, a fund that hadn’t yet been registered but was on track to raise more money. It ended up raising $300 million in addition to $1 billion in bundled private investment in public equity (PIPE) funds.
“The BENE deal is OFF!!!!” the UAV executives said in a company log entry, according to the Post report.
Although the discussions about using Digital World as the TMTG vehicle had come months before the SPAC had been registered with the SEC, it’s not clear they violated the federal ban on pre-arranged deals given Orlando’s role as head of both SPACs.
“Mr. Orlando having discussed a deal between Benessere and Trump Media wasn’t the same as him discussing a deal on behalf of Digital World,” a SPAC specialist said in the Times’ coverage of the allegation last year. “Digital World wasn’t obligated to disclose Mr. Orlando’s prior talks.”
There can be gray areas in instances where a sponsor runs multiple SPACs and targets a company with one SPAC after having seriously considered it with another, Michael Ohlrogge, a New York University law professor, told the Washington Post in its coverage last week.
Ohlrogge pointed to a merger involving a maritime shipping company that the SEC ultimately approved after first halting the review.
Whatever the SEC decides to do, information provided by Wilkerson makes it clear Orlando and Wilkerson’s partners at UAV were aware they needed to walk a fine line not to violate the SEC rule.
After Orlando first raised the option of switching from BENE to DWAC, Andy Litinsky and Wes Moss, Wilkerson’s partners at UAV, recorded their next conversation on the matter to ensure they were on the record saying there should be no DWAC discussions until after it had completed its SEC registration.
“We can only engage in discussions after [Digital World is] public,” the Post reported Litinsky saying in the recording.
“That’s exactly the rule we have to play by,” Orlando said in the recording.
