The Justice Department is probing financially troubled Lordstown Motors Corp., according to several media reports Friday.
It is the latest blow to the company that plans to begin building battery-powered commercial pickup trucks this fall at a former General Motors plant in the northeast Ohio town from which it took its name and where GM built cars for 54 years.
Lordstown Motors (NASDAQ: RIDE), which began public trading last October following a merger with special purpose acquisition company (SPAC) DiamondPeak Acquisition Corp., recently filed a notice of “going concern” with the Securities and Exchange Commission, saying it might not survive the year without new funding.
The company shares, already battered by earlier negative news, plummeted Friday, falling 11.30% to $9.18 near the end of trading. Lordstown shares traded as high as $29, but they never recovered from a blistering report in March of fraud allegations by short seller Hindenburg
Research that alleged the company inflated pre-orders and was unready for production.
Justice probe follows ongoing SEC investigation
Little is known about the Justice Department investigation, first reported by the The Wall Street Journal, which attributed the story to unnamed sources. The New York Times and CNBC followed with similar stories, also attributed to unidentified persons. The Justice Department would be following the SEC, which already has issued subpoenas.
For its part, Lordstown Motors has:
Claimed and retracted multiple assertions that it had as many as 100,000 pre-orders for its Class 2A pickup based on a Chevrolet Silverado and licensed technology from Workhorse Group (NASDAQ: WKHS). Heavily shorted Workhorse shares also fell by more than 9% intraday Friday.
Accepted the resignations of founder and CEO Steve Burns and Chief Financial Officer Julio Rodriguez on June 5.
Denied the impropriety of five Lordstown executives who sold company stock in early February that led outside accountants and securities lawyers to question the company’s internal controls over its executives’ trading. The Journal reported that a special committee of the company’s board of directors found the trades were unrelated to the company’s performance, which fell below first-quarter earnings projections.
The Department of Justice did not immediately return a call from FreightWaves seeking to confirm an investigation. In a statement, Lordstown Motors but did not specifically address a DOJ probe.
“Lordstown Motors is committed to cooperating with any regulatory or governmental investigations and inquiries. We look forward to closing this chapter so that our new leadership — and entire dedicated team — can focus solely on producing the first and best full-size all-electric pickup truck, the Lordstown Endurance.”