During a videoconference call one day in April, a group of men came together to explore a proposal to fund former President Donald J. Trump’s proposed media venture.
Patrick Orlando, the chief executive of Digital World, was also in charge of numerous other blank-check firms at the time of the videoconference, and it is unclear which one he was representing.
In spite of this, Digital World said in securities filings a month after the video conference, which had not previously been revealed, that it had neither identified or commenced discussions with any possible merger candidates.
Blank-check Companies such as Digital World, which are also known as special purpose acquisition companies, or SPACs, first sell their stock to investors before searching for a company with whom to combine their operations. They are not required to have an agreement in place prior to selling their stock options.
If authorities discover that Digital World’s papers included false or misleading information, they might take action against the firm or its investors, which could make the proposed merger more difficult to complete. A large sum of money is at risk for Mr. Trump’s firm: Last week, Trump Media stated that anonymous investors had committed to invest $1 billion in the company, on top of the approximately $300 million that Digital World earned in its initial public offering (IPO) back in September.
Andy Litinsky and Wes Moss, two former competitors on “The Apprentice,” participated in the video conference with Mr. Orlando, the chief executive of Digital World, as well as former President Barack Obama, who was pitched the Trump social media business just after he left office in January.
An additional participant in the videoconference was Rodrigo Veloso, who was appointed to the Digital World independent board of directors earlier this year. As an advisor to Mr. Orlando, Mr. Veloso, the creator of a firm that produced O.N e coconut water and a personal friend of Mr. Orlando, took part in the conference call as a result of information provided by a source acquainted with the situation.
However, in its attempts to present an appearance of success, the company has been known to take shortcuts. Two persons with knowledge of the allegations said that certain ARC executives complained to company officials about the company’s sloppiness with documentation and its proclivity for inflating its size, particularly by overstating the number of worldwide sites it had, among other things.
Mr. Orlando had been appointed as the chief executive of many of ARC’s special purpose acquisition companies, including Benessere, which raised $100 million in a public sale earlier this year. It was just last month that the merger of Benessere and Trump Media was being negotiated by the American Research Center (ARC).
Trump Media, according to Sergio Camarero, managing partner at ARC, was their chosen target, according to Benessere authorities. Some Benessere officials, on the other hand, objected because they didn’t want anything to do with Mr. Trump, according to two individuals who were privy to the negotiations.
ARC swiftly turned to Digital World, another of its SPACs, as a prospective vehicle for a merger with the Trump organisation. As previously reported, ARC recently appointed Mr. Orlando as the company’s chief executive after its former CEO failed to gather enough funds to get Digital World up and running, according to a source with firsthand knowledge of the matter
It was early April when the videoconference session took place between ARC, Mr. Orlando and Mr. Veloso, as well as representatives of the Trump campaign. At the time, Digital World had not yet filed a registration statement with the Securities and Exchange Commission (SEC) in order to offer its stock to the general public. It finally did so on May 26th, seven weeks after the first announcement.
It was critical that the information was shared. Because authorities let blank-check firms to sell their shares to the public while disclosing just the bare minimum of financial information, the companies are not permitted to have merger partners in mind prior to their first public offerings. The rationale for this is that they would otherwise serve as a backdoor way for firms to go public while avoiding rigorous public examination and criticism from the media.
On September 8, Digital World went public, generating a total of $293 million. Later in the month, Trump Media signed a letter of intent with Digital World, which was later cancelled. Earlier this month, Mr. Orlando and Mr. Veloso, the board member who participated in the video conversation in April, travelled to Mar-a-Lago to make the formal announcement of the transaction.
Immediately upon the news of the merger, shares of Digital World soared from $10 to $94, a gain of more than half. However, the company has subsequently given back more than half of those gains.
Mr. Cinta’s scheduled online interaction with the public was also postponed. The event’s sponsor, Voice of ASEAN TV, announced the cancellation of the event in a posting on LinkedIn, citing “legal and confidentiality difficulties deriving from Securities and Exchange Commission laws.” It has now been provisionally scheduled to take place on Christmas Eve.