Legal: Court refuses to toss SEC fraud case against Digital World SPAC chief

A federal court refused to drop fraud charges against a SPAC executive who allegedly lied to investors about a secret Trump Media deal. 

On March 2, 2026, a federal judge in Washington, D.C., ruled that Patrick Orlando – the chairman and chief executive of a blank-check company called Digital World Acquisition Corp. – must face Securities and Exchange Commission fraud charges in court. The judge found that the SEC's case was solid enough to move forward, and the reasoning behind that decision has real implications for how investment professionals think about disclosure obligations and SPAC transactions. 

Digital World was a special purpose acquisition company, or SPAC – essentially a shell corporation set up for one purpose: raise money through a public offering, find a private company, and merge with it. Orlando controlled it. And according to the SEC, he had quietly settled on his merger target – Trump Media and Technology Group, the company behind the Truth Social platform – well before Digital World ever went public. 

The problem is that while those behind-the-scenes discussions were apparently well underway, Orlando was signing off on public disclosures that said the exact opposite. Multiple filings submitted to regulators between May and August 2021 stated clearly that Digital World had not identified any merger target and had not held any substantive talks with potential partners. The SEC says that was not true. 

What the agency describes instead is a months-long campaign. Orlando and others connected to Digital World allegedly took part in upwards of 100 conversations with Trump Media representatives between late May and early September 2021. He reportedly visited their offices in Sarasota, Florida. Internal messages, according to the complaint, showed both sides treating the deal as heading in one direction. One message attributed to Orlando read: "Let's make it DWAC." Digital World went public in September 2021, raising $287.5 million. Within weeks, a letter of intent was signed between the two companies, and a definitive merger agreement was announced on October 20, 2021. The following day, Digital World's stock closed at $45.50 – a more than 400 percent increase from the day before. 

Orlando pushed back hard in court. His main argument was that SPAC executives talk to potential merger partners all the time – that is literally their job – and so those conversations should not automatically be treated as the kind of information investors need to know about. He found some backing for that view from SEC Commissioner Mark T. Uyeda, who issued a public dissent in December 2024 questioning whether the agency should be bringing these types of cases against SPACs at all. 

The judge acknowledged that point had some merit in theory. Of course a SPAC sponsor is going to explore deals. But the court said what the SEC described here was something different – not routine conversations but a coordinated effort to lock in a specific target while publicly denying any such plans existed. 

The court also found no reason to let Orlando off the hook on the question of intent. The volume of communications, his direct involvement in the negotiations, and the fact that he personally signed the misleading filings all pointed, the judge said, toward someone who knew what he was doing. 

The case now moves forward. Orlando has until April 1, 2026, to formally file his answer to the SEC's complaint. 

The message is straightforward. SPAC structures may be flexible, but the rules around what you tell investors – and when – are not. The courts, at least at this stage, are willing to let these cases run their course.