CLEVELAND – A lawsuit was filed against shareholders on Thursday against an electric truck start-up company that claimed to have defrauded investors by making false claims about the number of pre-ordered trucks and the progress it has made in starting production on a former General Motors plant in Ohio.
The lawsuit filed by shareholder Chris Rico against Lordstown Motors Corp. in a federal court in Youngstown seeks certification as a class action lawsuit.
Lordstown Motors RIDE,
CEO Steve Burns acknowledged that the U.S. Securities and Exchange Commission is conducting an investigation based on a lengthy and critical report released late last week by investment firm Hindenburg Research, which holds a position short on the shares of Lordstown Motors.
Read: Lordstown losses widen amid short sellers dispute, company reveals SEC poll
Burns, speaking during the company’s first earnings call Wednesday, said the company’s board of directors has formed a special committee “to review matters” surrounding the SEC’s investigation.
A company spokesman on Thursday did not respond to a request for email comments on the lawsuit.
The complaint is largely based on the Hindenburg Research report which says Lordstown Motors “has no revenue or marketable product” and “has misled investors in both their demand and production capacity”
The report and the lawsuit said that according to a former employee, production is estimated to be between three and four years. Burns has said production would begin this September.
The company has announced that it has sold 100,000 trucks to several U.S. fleets, but those orders, according to the lawsuit, are not binding.
The lawsuit said that according to the documents, investors, business partners and former employees, “the company’s orders are largely fictitious and are used as a point to increase capital and confer legitimacy.”
The Hindenburg report said a recently announced $ 735 million deal for 14,000 trucks was for an alleged buyer who does not operate a fleet of vehicles and is headquartered in a small apartment building in Texas.
The company received unwanted publicity in January when a prototype vehicle caught fire 10 minutes after the initial test.