Lawsuits Threaten to Delay Trump Media’s Merger With a Shell Company

A rash of lawsuits are threatening to stall a shareholder vote on the long-delayed merger of former President Donald J. Trump’s social media company and a cash-rich shell company.

Two early founders of Trump Media & Technology Group have filed suit to preserve their ownership stake in the business, the parent company of the Truth Social online posting platform. The lawsuit, filed Wednesday under seal in Delaware Chancery Court by a partnership led by Wes Moss and Andy Litinsky, claims that Trump Media is trying to dilute its ownership stake in the company, of which Mr. Trump is a majority shareholder.

The lawsuit seeks an expedited hearing in Delaware state court ahead of a March 22 vote by shareholders of Digital World Acquisition Corp. on its merger with Trump Media. Digital World is the special purpose acquisition company that was set up to raise money from investors in an initial public offering and to use that money to find a private company like Trump Media to buy.

Mr. Moss and Mr. Litinsky were contestants on Mr. Trump’s realty television show, “The Apprentice,” and went to him in January 2021 with the idea of creating a social media company.

Digital World’s former chief executive officer, Patrick Orlando, also has filed suit in Delaware seeking additional shares in the company. And Digital World has filed its own lawsuit in Florida state court arguing that Mr. Orlando, who was the sponsor of its initial public offering, was not entitled to more shares because of his “avarice, incompetence and general refusal to act” in the company’s best interest.

Digital World raised $300 million in an initial public offering in September 2021 and about a month later announced its planned merger with Trump Media, which needs the deal to operate Truth Social. Mr. Trump’s social media company has said in regulatory filings that without a fresh source of funds, it might not survive.

In a regulatory filing on Friday, Digital World raised the prospect of Mr. Orlando, who remains a board member, of rejecting the merger. Mr. Orlando’s group owns about 15 percent of Digital World stock; most of the remaining shares are held by some 400,000 retail investors. In another filing, it raised the prospect of possible lawsuits that could delay the merger.

Post-merger, Mr. Trump would own 79 million shares in Trump Media. Based on Digital World’s current $39 a share price, Mr. Trump’s holding would be valued at $3 billion. The potential merger comes at a time he must come up with the cash to pay a $454 million penalty after a New York judge’s ruling in a civil fraud case.

In merging with Digital World, Trump Media would not only get an influx of cash to fund its operations but publicly traded shares that can be used to finance acquisitions. As chairman of Trump Media, the former president was given the lion’s share of stock because of his name’s value to the company’s success. He would be its largest shareholder if the merger with the public company is completed.

Shares of Digital World have soared as Mr. Trump has gotten closer to securing the Republican nomination for president and with the prospect of the deal closing later this month. Its stock price has risen even as advertising on Truth Social has been lackluster.

Mr. Orlando’s firm, which sponsored Digital World, would be Trump Media’s second largest shareholder.

Mr. Orlando’s suit comes months after he resigned as Digital World chief executive and while it negotiated a settlement with the Securities and Exchange Commission. Last summer, Digital World agreed to pay an $18 million penalty to resolve allegations it had engaged in improper merger talks with Trump Media before its initial public offering. SPACs are not supposed to have a deal lined up before their I.P.O.

In the settlement agreement, Digital World’s chief executive, who was not named but was identified by his job title, was described by regulators as playing an instrumental role in those early deal talks. In its lawsuit filed against Mr. Orlando, Digital World said Mr. Orlando had received a formal notification from the S.E.C. that he might be subject to an enforcement action.

Mr. Orlando has not been charged with any wrongdoing. He declined to comment, and his lawyer did not return a request for comment.