Third class action suit filed against Lordstown Motors
LORDSTOWN — Lordstown Motors Corp. faces another class action investor lawsuit, this one — like the previous two — alleging the company misled investors regarding preorders for its battery-powered truck, the Endurance.
The latest lawsuit by investor Sulayman Zuod also names company founder / CEO, Steve Burns; Rich Schmidt, president; Julio Rodriguez, chief financial officer; and Michael Fabian, director of stamping operations.
It also claims they were part of a scheme to deceive the stock market and through their conduct, caused the price of Lordstown Motors stock to be artificially inflated, allowing several top executives, including Schmidt and Rodriguez, to make a tremendous amount of money when they sold off their personal shares.
And those investors who purchased stock at the pumped up price suffered significant financial loss when the company’s RIDE stock started to fall, the lawsuit claims.
“Defendants’ fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Lordstown common stock was a success,” the lawsuit states, because it deceived the investing public regarding the company’s prospects, artificially inflated the company’s common stock, permitted some executives to sell off $27 million of their own shares “at fraud-inflated prices” and caused Zuod and others to buy shares at the puffed up price.
The lawsuit claims Schmidt, between Dec. 11 and Feb. 3 sold 263,412 shares worth $6.3 million and Rodriguez, 9,300 shares worth $251,000.
Also, David Hamamoto, director and former president of DiamondPeak Holdings Corp., a special-purpose acquisition company that merged with Lordstown Motors on Oct. 22, sold 1 million shares the same day worth $16.3 million, the lawsuit states. He is not a defendant in the lawsuit.
The merger also is the subject of a U.S. Securities and Exchange Commission probe.
An email seeking comment was sent to a spokesman with Lordstown Motors regarding the latest lawsuit.
The earlier two lawsuits were combined into one last week.
The latest lawsuit claims the class period starts Aug. 3, when Lordstown Motors announced the planned merger with New York-based DiamondPeak Holdings. In a press release then, the company claimed it had more than 27,000 preorders for the truck that represented more than $1.4 billion in revenue mostly from fleet customers.
It also contains other examples of preorder announcements and statements regarding figures from the company and Burns, claiming the company “never had firm commitments much less legally binding contracts for any” of the preorders when the merger was announced and many of the customers touted during the class period, which ended March 24, “were sham operations that were incapable of making purchases of any sort,” the lawsuit states.
The claims are similar to ones made in a biting short-sellers report released March 12 by New York City-based Hindenburg Research. It alleges Lordstown Motors misled its investors regarding preorders and production schedule for its battery-powered truck. The report also characterized the company as a mirage.
Last week, Lordstown Motors publicly revealed the first two beta prototypes of the Endurance. The company announced in March it planned, after the first prototypes were manufactured, to produce one per day over the next two months. The betas will be used for crash, engineering and validation testing.