CLEVELAND (AP) — A shareholder lawsuit was filed Thursday against an electric truck startup company claiming it has defrauded investors by making spurious claims about the number of preordered trucks and the progress it has made in starting production at a former General Motors plant 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 CEO Steve Burns acknowledged that the U.S. Securities and Exchange Commission is conducting an inquiry based on a lengthy and critical report issued late last week by the investment firm Hindenburg Research, which holds a short position on Lordstown Motors stock.
Burns, speaking during the company’s first-ever earnings call on Wednesday, said the company’s board of directors has formed a special committee “to review matters” surrounding the SEC inquiry.
A company spokesperson did not respond to an emailed request for comment about the lawsuit on Thursday.
The complaint is largely based on the Hindenburg Research report that said Lordstown Motors has “no revenue and no sellable product” and has “misled investors on both its 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 this September.
The company has touted that it has presold 100,000 trucks to various fleets in the U.S. But those orders, according to the lawsuit, are non-binding.
The lawsuit said that according to documents, investors, business partners and former employees, “the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.”
The Hindenburg report said a recently announced $735 million deal for 14,000 trucks was to a purported buyer who doesn’t operate a vehicle fleet and is based out of a small apartment building in Texas.
The company received unwelcome publicity in January when a prototype vehicle caught fire 10 minutes into its initial test drive.