Investors accuse the ex-CEO of the company that helped take Trump Media public of stiffing them out of millions of shares

• Investors accuse Florida businessman Patrick Orlando of diverting millions of Trump Media shares from them.
• Orlando was the CEO of the blank check firm that helped take Trump Media public.
• Plaintiffs say in a lawsuit that Orlando "engaged in malicious and intentional self-dealing."

Investors have accused the ex-CEO of the blank check firm that helped take the parent company of President-elect Donald Trump's social media site public of stiffing them out of million of shares.

The plaintiffs — more than three dozen investors — allege in a new lawsuit against Florida businessman Patrick Orlando that he "engaged in malicious and intentional self-dealing of monumental proportions to the tune of potentially hundreds of millions of dollars" by diverting assets to himself and his family through entities including an offshore shell company.

The plaintiffs say in the lawsuit that they are founding members of Orlando's ARC Global Investments II entity, the sponsor of a SPAC that merged with Trump Media & Technology Group to take it public earlier this year. Orlando was the CEO and chairman of the SPAC, Digital World Acquisition Corporation.

The lawsuit, filed Tuesday in Delaware's Chancery Court, alleges that Orlando and ARC Global have failed to transfer what is owed — roughly 75% to 80% of the total approximate 8.1 million shares of stock in Trump Media that ARC Global owns — to the plaintiffs.

Trump Media is the operator of Trump's social media platform, Truth Social.

Orlando, his attorneys, and attorneys for ARC Global did not immediately respond to requests for comment from Business Insider on Thursday.

The lawsuit accuses the defendants of "coordinated and intentional theft of stock" and "egregious breaches of fiduciary duties" by Orlando.

Orlando, the lawsuit alleges, "orchestrated a scheme with the other Defendants to divert the majority of ARC ownership interest to himself and his family through a closely held alter-ego entity named Franlu LLC" and a Cayman Islands-based entity called Belsize Ventures Ltd. Franlu and Belsize are also named as defendants in the lawsuit.

"In doing so, Orlando intentionally breached his fiduciary duties owed to Plaintiffs by diluting the ownership interests of the Plaintiffs," the lawsuit says. "Specifically, as Managing Member of ARC, Orlando conveyed roughly 46% of ARC's membership interest to Franlu in a secret transaction for zero consideration in exchange."

The lawsuit alleges that ARC Global is diverting shares to Orlando and his "inner circle" and "liquidating remaining shares to fund Orlando's own legal defense efforts and other personal expenses on a commingled basis with ARC's own assets."

"While claiming that ARC was not in position to distribute shares, Orlando has been enriching himself through a series of lavish purchases, including a brand new six-million-dollar home in Miami, from the proceeds of TMTG stock that he misappropriated," the lawsuit alleges.

To date, the plaintiffs have received only a "meager fraction" of the Trump Media shares they say they are owed by ARC Global under the terms of their subscription agreements, the lawsuit says.

The merger that allowed Trump Media to trade under the stock ticker DJT was completed in March, with the lock-up period ending in September, the lawsuit says.

"Even assuming the lock-up period stood as the hurdle to Plaintiffs receiving their Founder Shares, the lock-up period ended over one month ago," the lawsuit says.

The lawsuit says that in September, Orlando emailed ARC Global members, including the plaintiffs, "claiming that 'ARC has matters that must be addressed before equity distributions are made."

"As examples, Orlando listed certain 'liabilities of ARC,' including 'bona fide creditors, such as professional advisors or noteholders, as well as costs imposed upon ARC through litigation,'" the lawsuit says.

The lawsuit says that Orlando emailed ARC Global members again in October "stating that '[i]nitial distributions [were] in progress,' but that 'further distributions' were only 'expected in the future.'"

"Orlando's email again alludes to 'attacks' on ARC and the need to 'defend itself,' without providing any explanation for how such 'attacks' affect ARC's ability to tender to subscribing investors their TMTG shares," the lawsuit continues.

The Securities and Exchange Commission sued Orlando in July, alleging that he "falsely represented" that his blank check company, Digital World Acquisition Corp., did not intend to merge with any specific company.

"Orlando knew these statements were false because he had personally engaged in numerous lengthy discussions with representatives of Trump Media & Technology Group Corp," the SEC said in the lawsuit.

The group of investors who filed the latest lawsuit against Orlando are seeking to recover their "rightful portion" of the 8.1 million stock shares, "nullify improper transactions," and monetary damages.

Trump Media's stock rose 5.9% Wednesday after Trump defeated Vice President Kamala Harris in the presidential election but dropped 23% Thursday, closing at $27.70.