CLEVELAND – On Thursday, a shareholder lawsuit was filed against an electric truck startup company that claims it has defrauded investors by making false claims about the number of pre-ordered trucks and the progress it has made in starting production in a former General Motors factory in Ohio.
The lawsuit filed by shareholder Chris Rico against Lordstown Motors Corp. in federal court in Youngstown, seeks certification as a class action complaint.
Lordstown Motors RIT,
CEO Steve Burns acknowledged that the US Securities and Exchange Commission is conducting an investigation based on a long and critical report released late last week by investment firm Hindenburg Research, which has a short position in Lordstown Motors stock.
Read: Lordstown’s losses are growing in a short-seller dispute, the company’s SEC probe reports
Burns said on Wednesday during the company’s first-ever earnings call, saying the company’s board of directors has formed a special committee “to review matters” around the SEC investigation.
A company spokesperson on Thursday did not respond to an email request for comment about the lawsuit.
The complaint is based largely on the Hindenburg Research report which said that Lordstown Motors “has no revenue and no marketable product” and “has misled investors about both demand and production capabilities.”
The report and lawsuit said that, according to a former employee, estimated production is three to four years away. Burns has said production would begin in September.
The company has touted that it has pre-sold 100,000 trucks to various fleets in the US, but those orders are not binding, according to the lawsuit.
The lawsuit said that according to documents, investors, business partners and former employees, “the company’s orders are largely fictitious and used as a tool to raise capital and provide 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 and is located in a small Texas condo.
The company received unwanted publicity in January when a prototype vehicle caught fire 10 minutes after the first test drive.