Key shareholder vote on Truth Social delayed, while Trump Media exec gets suspended

The merger between a Miami-based investment company and former President Donald Trump’s media firm remained uncertain Monday, when a critical shareholder vote on a deadline extension was put on hold.

Patrick Orlando, CEO and chairman of Digital World Acquisition Corp., said he delayed the vote until Nov. 3 so stockholders in the publicly traded company have more time to consider a yearlong extension that would allow more time for federal regulators to review the merger with Trump Media & Technology Group. The regulatory extension is considered crucial to Trump’s goal to create a Florida-based social-media platform as a conservative alternative to Twitter.

“We are working diligently to record all the votes that are continuing to come in from our stockholders and are adjourning this meeting to provide additional time for stockholders to cast their votes,” Orlando said during a webcast and audio conference of Digital World’s shareholder meeting.

Orlando did not disclose how many shareholders have cast ballots for or against the yearlong extension, which was proposed at Digital World’s previous stockholder meeting last month.

The Trump-led social-media platform, Truth Social, went online in February, but its future could be in jeopardy if shareholders of Digital World vote not to extend the deadline until September 2023 to complete the $1 billion-plus merger deal under scrutiny by the Securities and Exchange Commission.

Meanwhile, a Trump Media executive who spoke exclusively with the Miami Herald about what he saw as serious problems with the merger and Truth Social’s future has been been suspended indefinitely. William Wilkerson, Trump Media’s senior vice president of operations over the past year, was suspended Friday for allegedly violating the terms of his employment agreement after the Herald published a story in which he said the former president’s new firm would go “bankrupt.”

“Your suspension is indefinite pending a determination by the Company’s Board of Directors whether for-cause termination is warranted based on a review of all relevant facts and circumstances,” Trump Media’s lawyers wrote Wilkerson on Friday.

The merger between Digital World and Sarasota-based Trump Media could fall apart without the deadline extension because Digital World needs time to get approval from the SEC and to reassure investors of Truth Social’s viability. Without that extra time, Digital World’s shareholder funds might have to be returned to investors, depriving Truth Social of much-needed operating capital.

At least some investors have grown jittery about Trump Media’s merger with Digital World and recently withdrew about $140 million from the deal.

The investigation

At the same time, federal regulators and prosecutors in New York have stepped up parallel investigations into Digital World and its deal with Trump Media, according to the Miami investment firm’s filings with the SEC and published news media reports. The scope of the ongoing twin investigations, which are probing possible securities and trading violations, is not yet clear, but no one has been accused of wrongdoing.

The former president’s fledgling media firm and social platform have deep Florida roots: Trump Media was founded in January 2021 after Twitter banned Trump for claiming repeatedly that the 2020 election was “stolen.” It was based originally in his hometown of Palm Beach and then moved to Sarasota. Early investors included a conservative radio host who grew up in Fort Lauderdale, a South Florida lawyer whom Trump once fired as a contestant on his TV reality show, “The Apprentice,” and Miami financier Orlando, who heads Digital World.

The merger between Trump Media and Digital World was conceived at Trump’s opulent Palm Beach estate, Mar-a-Lago, and his exclusive golf club in Bedminster, N.J., according to a Trump Media executive who spoke exclusively with the Miami Herald and provided records, including emails, photos and contracts of the merger agreement.

Wilkerson, the suspended Trump Media executive, filed a whistle-blower complaint in August with the SEC, alleging securities violations involving the Trump Media and Digital World merger.

Wilkerson, who may be entitled to an award through his complaint, is cooperating with federal authorities in their investigation of the merger, according to his attorneys Phil Brewster, Patrick Mincey and Stephen Bell.

Wilkerson is an eyewitness who has turned over internal business documents to SEC enforcement officials, federal prosecutors and FBI investigators. He has been part of the team that founded and built Trump Media, so as an insider he can chronicle the events under scrutiny.

Wilkerson, who has also had an up-close view of the launching of the social media platform as an alternative to Twitter, Facebook and Instagram, told the Herald that he believes Truth Social’s future is shaky. He argues the site has quickly become more about promoting Trump than giving voice to a range of conservatives and others, and that the operation is struggling with issues that go beyond regulatory questions about the financial structure that created it.

Wilkerson said that if shareholders don’t approve the merger extension on Monday, the Trump Media marriage to Digital World would probably be called off and investors’ funds would be liquidated and returned to them.

“One way or another, this company is going to go bankrupt,” Wilkerson, 38, told the Herald. “I don’t think the company is going to be approved by the SEC.”

Truth Social’s platform also has failed to attract the hoped-for audience that would make it a viable Twitter rival, though it saw an uptick in downloads after FBI agents recovered allegedly mishandled classified documents from Trump’s Mar-a-Lago estate in August.

As of late April 2022, MarketWatch reported that Truth Social had around 513,000 active daily users, in comparison to Twitter’s reported active daily user base of 217 million. In mid-August 2022, Trump was reported to have 3.9 million Truth Social followers. He previously had 89 million on Twitter and 34 million on Facebook before the twice-impeached president was banned from both.