Federal prosecutors have opened an inquiry into enterprise issues at Lordstown Motors, the embattled electric truck producer that was already being investigated by securities regulators and not too long ago turned over its prime administration group, in line with two individuals briefed on the matter.
It was not clear what points the prosecutors, with the U.S. lawyer’s workplace in Manhattan, are looking into. The investigation is in its early phases and commenced not too long ago, stated the individuals, who weren’t approved to talk publicly.
In February, the Securities and Exchange Commission opened an investigation into claims that Lordstown had made about the variety of orders from industrial patrons for its electric truck, which the Ohio firm has stated it expects to start manufacturing and promoting later this yr.
The firm had disclosed beforehand that it had acquired two subpoenas from the S.E.C. in search of details about these pre-order claims and a few points of its merger final yr with DiamondPeak Holdings, a particular objective acquisition firm put collectively by David Hamamoto, an actual property investor.
A spokesman for the U.S. lawyer’s workplace declined to remark. The investigation by federal prosecutors was first reported on by The Wall Street Journal.
Representatives for the U.S. lawyer’s workplace didn’t instantly reply to a request for remark.
In a press release, Lordstown stated it was “committed to cooperating with any regulatory or governmental investigations and inquiries.” The firm additionally stated it was “looking forward to closing this chapter” in order that its new management might deal with the manufacturing of its electric pickup truck, named Endurance.
In June, Lordstown’s founder and chief government, Steve Burns, together with the firm’s chief monetary officer, resigned following the launch of a report by the firm’s board looking into Lordstown’s claims that it had practically 100,000 pre-orders for it vans. The report stated Lordstown’s these claims “were, in certain respects, inaccurate.”
The board ordered the report after Hindenburg Research, an funding agency, issued its personal report in March that centered on the pre-order claims and what it stated have been different deceptive claims at the firm. The Lordstown board’s report stated it discovered little benefit in most of Hindenburg’s claims. But shares of Lordstown, which as soon as traded round $29 a share, have by no means recovered from the launch of the Hindenburg report. The inventory ended the day at $9.23, down 11 %.
Lordstown was certainly one of the extra high-profile firms to go public by merging with a so-called SPAC. Such blank-check firms are created to boost cash from traders for the sole objective of shopping for an present enterprise.
Two different electric car start-ups, Nikola and Canoo, have additionally come underneath regulatory scrutiny not too long ago. The S.E.C. is investigating each firms, which went public by means of a SPAC. Nikola has additionally been subpoenaed by federal prosecutors.
Mr. Burns launched Lordstown in early 2019 as General Motors was looking for a purchaser for an enormous manufacturing unit in Lordstown, Ohio. G.M. offered its manufacturing unit to Mr. Burns’s firm for $20 million and have become an early investor in Lordstown. Workhorse Group, one other electric car firm that Mr. Burns had based, can also be an investor.