Lordstown Motors Faces Fourth Class Action Lawsuit
YOUNGSTOWN, Ohio – A fourth class-action complaint has been filed against Lordstown Motors Corp., alleging the company misled investors regarding pre-orders of its all-electric Endurance pickup truck.
The filing joins three previous class-action cases filed in U.S. District Court here in the wake of a damaging report by short-seller Hindenburg Research issued March 12.
According to the latest lawsuit, investor Jesse Brury claims he acquired shares of Lordstown Motors at “artificially inflated prices” between Aug. 3, 2020, and March 17, 2021. The complaint contends, as do the previous actions, that Lordstown Motors and certain executives made “materially false and misleading statements regarding the company’s business.”
Specifically, the lawsuit said that Lordstown Motors failed to disclose that the company’s pre-orders were non-binding and that many of the would-be customers lacked the means to purchase the vehicle.
The lawsuit names Lordstown Motors, its CEO Steve Burns, President Rich Schmidt and Chief Financial Officer Julio Rodriguez as defendants.
Many of the allegations stem from the Hindenburg report, which contends that Lordstown Motors and some of its executives mischaracterized non-binding letters of intent as “pre-orders” for the Endurance pickup. The report also alleges that the company is far behind schedule in production of the vehicle.
“The company has consistently pointed to its order book of 100,000 pre-orders as proof of its deep demand for its proposed EV truck,” the report said. “Our conversations with former employees, business partners, and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.”
Burns has since said that the company had always disclosed that the pre-orders were non-binding.
Earlier this month, Lordstown Motors unveiled the first two beta models of the Endurance, which will be used for safety validation and crash testing. The Endurance is billed as the world’s first all-electric commercial pickup.
Lordstown Motors’ Burns has said that the company is on track to begin full production of the vehicle by the end of September. The CEO has said the company wants to hire as many as 1,500 workers once production hits full stride.
Copyright 2024 The Business Journal, Youngstown, Ohio.
