Lordstown Motors Discloses Justice Department Investigation

The Wall Street Journal first reported the Justice Department’s inquiry earlier this month.

A spokesman for the Justice Department declined to comment.

Lordstown Motors didn’t have an immediate comment. A spokesman said earlier this month the company is committed to cooperating with any investigations and inquiries and looks forward to focusing on production with its new leadership team.

The Ohio-based startup has said it has received two subpoenas from the SEC requesting documents and information related to its merger deal in October with publicly traded DiamondPeak Holdings Corp., a special-purpose acquisition company.

The SEC is also seeking information related to the company’s preorder book for its all-electric pickup truck. Those preorders had been promoted by executives and the upstart manufacturer as a sign of future demand for the Endurance, which has yet to go into production.

Lordstown Motors shares were roughly flat, trading at around $8.89 a share Friday morning.

The challenges have been mounting for Lordstown Motors, one of several electric-vehicle startups to go public last year through SPAC merger deals. In the last few months, it has been marred by bad news. Its executives have said it is burning through cash faster than expected, and it disclosed in a regulatory filing in June a going concern notice warning it may not survive the next 12 months without an additional infusion of capital.

The company’s statements about its truck preorders have also come under scrutiny recently, following a report by short seller Hindenburg Research that raised questions about their legitimacy and other aspects of its business, including whether the Endurance would start production in September.

A Lordstown Motors board committee formed to look into short seller’s claims confirmed that some of the company’s statements on its truck preorders were inaccurate, while saying the Hindenburg report was false and misleading in other respects. Around the same time of the committee report’s release, its founder and CEO,

Steve Burns,

left the company, along with several other top executives.

The federal investigations into Lordstown Motors come as the company is trying to stabilize its leadership team and approaching the launch of its first truck, the Endurance, which executives have said will start limited production in September.

Lead independent director

Angela Strand

has taken over as executive chair as the startup searches for a new chief executive. It has also engaged turnaround specialist AP Services LLC, a subsidiary of AlixPartners LLP.

Write to Ben Foldy at [email protected]