LORDSTOWN, Ohio (WKBN) – Another class-action civil lawsuit has been filed against Lordstown Motors, alleging that company officials profited off of misleading claims.
The lawsuit filed Friday in the U.S. Northern District Court of Ohio by Sulayman Zuod lists the defendants as Lordstown Motors Corp., CEO Stephen S. Burns, Chief Financial Officer Julio Rodriguez, President Rich Schmidt and Director of Stamping Operations Michael Fabian.
The lawsuit cites a recent report by Hindenburg Research, which alleged that the company “misled investors,” focusing on the company’s demand and production capabilities. It states its review shows the “…company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.”
The report was in response to Lordstown Motors’ claims that it had 100,000 pre-orders for the Endurance electric pick-up truck. Hidenburg Research said many of those orders were from sham operations or from those who were unable or unwilling to actually make any purchases.
Hidenburg Research is a short-seller and financial experts say it has a financial interest in releasing such a report.
The lawsuit contends that because of those claims by company officials, Lordstown Motors’ stock was inflated and officials cashed in, selling nearly $27 million of their personally-held shares.
The lawsuit also cites an interview with CEO Steve Burns on CNBC March 18, in which Burns stated that they never said the company had orders, as there was no product yet. He said the preorders were to gauge interest in the product, the lawsuit contends, citing CNBC.
Stock prices fell after those reports.
According to the lawsuit, Zuod purchased Lordstown Motors’ stock and was negatively affected by the developments.
The class-action period begins August 3, when Lordstown Motors announced it would obtain a public stock listing following a merger with acquisition company DiamondPeak Holdings Corporation.
The lawsuit is requesting damages and interest, as well as costs and attorney fees for the plaintiff and members of the class.
The company’s CEO previously brushed off Hindenburg Research’s allegations, saying Lordstown Motors is conducting legitimate business and that there will always be “haters.”
On Wednesday, officials at Lordstown Motors announced that the first two betas of the Endurance pickup trucks rolled off the manufacturing line. They said they’re committed to begin mass production of the all-electric vehicles in September.