Federal prosecutors are investigating electric vehicle start-up Lordstown Motors, examining its pre-orders and merger last year with special purpose acquisition company DiamondPeak Holdings.
The company disclosed the probe by the US attorney’s office for the southern district of New York in a regulatory filing on Thursday.
In March, short seller Hindenburg Research accused the Ohio manufacturer of inflating pre-orders and exaggerating the viability of the technology used in its flagship pickup truck, the Endurance.
The US Securities and Exchange Commission has been examining the company for months and has sent it two subpoenas. Thursday’s filing is the first confirmation from the company that there is also a criminal investigation.
“We have co-operated, and will continue to co-operate, with these and any other regulatory or governmental investigations and inquiries,” Lordstown said in the filing.
Lordstown attracted national attention in 2019, when it said it would buy the auto plant that General Motors planned to close in north-east Ohio, a region that has struggled economically. The Detroit automaker loaned the start-up $40m for the purchase.
As the auto industry is shifting towards electric vehicles, Lordstown was seen as one player in the push to revitalise the area.
But three months after Hindenburg Research published its report about the company, Lordstown acknowledged that some of its pre-orders were unlikely to result in purchases.
“One entity that provided a large number of pre-orders does not appear to have the resources to complete large purchases of trucks,” the company said, while others “provided commitments that appear too vague or infirm to be appropriately included in the total number of pre-orders disclosed”.
But the manufacturer defended its technology and production timeline, saying Hindenburg Research’s criticisms were inaccurate.
In June, however, the company warned that it did not have enough cash to start production of the Endurance and that its business could fail. Less than a week later, the chief executive and chief financial officers resigned.