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Investor sues Lordstown Motors

LORDSTOWN — An investor in Lordstown Motors Corp. alleges in a federal lawsuit the electric truck upstart gave misleading and false information about preorders for its Endurance pickup and September launch date.

The lawsuit filed in Youngstown comes on the heels of the company’s first-ever earnings call Wednesday, during which its founder and CEO Steve Burns revealed the U.S. Securities and Exchange Commission has opened an investigation into Lordstown Motors.

That inquiry follows a biting short-sellers report published March 12 by New York City-based Hindenburg Research — known for short selling stocks — that characterized Lordstown Motors as a mirage with no sellable product.

The report, which the company has yet to directly respond to, claims the company mislead investors, and that Lordstown Motors’ more than 100,000 orders are “largely fictitious” and “used as a prop” to raise operating capital and confer legitimacy.

Burns said Wednesday the company is complying with the SEC inquiry, and its board of directors has formed a special committee to review the matter. He would not comment further.

Investor Matthew Rico filed the suit against Lordstown Motors, Burns, Rich Schmidt, company president; and Julio Rodriguez, chief financial officer. It seeks class-action status, stating the period investors purchased shares is Aug. 30 to March 17, 2021.

It claims the company made false and misleading statements and did not disclose that the preorders were non-binding, that many of the “would-be” customers did not have the means to make the purchases or have credible demand for the truck, the company was never on track to launch in September and that a test Endurance caught fire within in minutes of its initial test drive.

An email seeking comment was sent to a spokesman for Lordstown Motors.

The report by Hindenburg, an investment research firm, was noted throughout the lawsuit.

Burns indirectly addressed the report Monday at the company’s factory in Lordstown, the former General Motors assembly plant that Lordstown Motors has been retooling to start production. Then he said beta versions of the truck for testing would start coming off the line in 10 to 12 days. He doubled-down on that in Wednesday’s earnings call.

He also highlighted the 800,000-square-foot battery pack / propulsion center under construction there and its workforce. The company has about 500 employees now and plans to bring on another 500 over the next several months. Also, the company has 200 consultants on board.

“Anway, that’s all I can tell any doubter. There is always haters. I quoted Taylor Swift to somebody the other day, haters going to hate, hate, hate, hate. You’ve got to shake it off,” Burns said.

Also Wednesday, he addressed the Jan. 13 fire of an Endurance test mule on its maiden voyage in Farmington Hills, Mich., a Detroit suburb where Lordstown Motors has a satellite research and development center. The truck was destroyed.

Burns said the cause was connected to “human error” in assembling the hand-built truck.

“Naturally, we have corrected that. I don’t want to dismiss it, but I do want to say in this business of electric vehicles, it does happen. Thermal really has to be carefully watched, so we feel really good about that learning and a lot of other learnings,” Burns said. “We have third-party validation people testing the battery now just in case we missed anything.”

The lawsuit seeks damages to be determined at trial.

rselak@tribtoday.com

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