Lordstown Motors Confirms Federal Investigation
LORDSTOWN, Ohio – Electric-vehicle manufacturer Lordstown Motors Corp. on Thursday confirmed that it is the subject of a federal investigation into its merger with blank check company DiamondPeak Holdings Corp. and pre-orders for its all-electric pickup, The Endurance.
The company, in a statement tucked inside an amended prospectus filing, said that it has “been informed by the U.S. Attorneys Office for the Southern District of New York that it is investigating these matters.”
The filing affirms a Wall Street Journal report published July 2 that said federal authorities in Manhattan had launched an early stage investigation into the company.
In March, Lordstown Motors revealed that the U.S. Securities and Exchange Commission had initiated an inquiry into the company. Since then, the SEC has issued two subpoenas for documents and information related to the DiamondPeak merger and pre-orders for the Endurance, indicating the inquiry had moved to a formal investigation.
Short-seller Hindenburg Research published a blistering report March 12 that questioned the validity of claims made by Lordstown Motors executives that the company had achieved more than 100,000 pre-orders of the Endurance.
The report alleges that most of those orders were fabricated and that it was unlikely the company had the financial resources to start production of the Endurance. An internal investigation determined that executives from the company misstated the number of preorders for the all-electric pickup.
Lordstown Motors said in a restarted annual report for 2020 filed June 8 that it would require more capital to remain in business through next year. On June 13, its founder and CEO, Steve Burns, resigned from the company along with Chief Financial Officer Julio Rodriguez.
Angela Strand was appointed the company’s new executive chairwoman until a new CEO could be appointed.
Earlier this week, U.S. Sen. Sherrod Brown sent a letter to Lordstown Motors’ to Strand expressing his concerns over the investigations and asked the company to provide his office with detailed plans over how it intends to restructure the business.
“We remain committed to turning the tide of high unemployment in this region by successfully transforming the Mahoning Valley into ‘Voltage Valley,’ ” Strand replied, noting that the company is proceeding “with business as normal.”
Lordstown Motors merged with special purpose acquisition company DiamondPeak Holdings and went public October 26. The company’s first vehicle, the Endurance pickup, is expected to be in production by the end of September.
Copyright 2021 The Business Journal, Youngstown, Ohio.