Lordstown Motors confirms DOJ investigation into pre-orders and SPAC deal

Electric truck-maker Lordstown Motors Corp has confirmed that the Department of Justice is investigating its business, along with the SPAC deal that brought the company public last year and its pre-orders for its upcoming vehicle.

The start-up said in a filing Thursday that it has “received two subpoenas from the SEC for the production of documents and information, including relating to the Merger between DiamondPeak and Legacy Lordstown and pre-orders of vehicles, and we have been informed by the U.S. Attorney’s Office for the Southern District of New York that it is investigating these matters.”

It said it also has “cooperated, and will continue to cooperate, with these and any other regulatory or governmental investigations and inquiries.”

Earlier this month, WSJ reported that the Justice Department is investigating the company, citing sources familiar with the matter.

The DoJ investigation follows a probe by the Securities and Exchange Commission (SEC), inquiring about the pre-order data and the public statements made by executives, including its former Chairman and CEO Steve Burns.

In March, Hindenburg Research, a short-seller firm, reported a dispute over the electric pickup truck manufacturer’s statistics, published in January, that 100,000 pre-orders have been made and said, “extensive research reveals that the company’s orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.”

The report led to SEC investigation, and after two months, the company acknowledged that some disclosures which the firm made about pre-orders for the truck were “inaccurate,” but said the Hindenburg’s report “is, in significant respects, false and misleading.”

Following the internal assessment, Lordstown Motors’ CEO Burns and its CFO abruptly resigned, only days after the business had warned that it might not have enough cash to continue in business for the following year.

Lordstown went public through a SPAC merger in October.

The EV maker also disclosed between March 18 and May 14, 2021, six related putative class action lawsuits were filed against it and DiamondPeak, the blank check company, in the U.S. District Court for the Northern District of Ohio, asserting violations of federal securities laws.

Picture Credit: FT