Second investor seeks class-action lawsuit against Lordstown Motors

YOUNGSTOWN - Another investor is suing Lordstown Motor Corporation and CEO Steve Burns alleging they fraudulently inflated the value of the company’s stock and is inviting other investors to join the lawsuit if a judge allows it to become a class action.
Cleveland Attorney Scott Simpkins on Friday filed a civil lawsuit in U.S. District Court on behalf of stockholder Robert Palumbo claiming LMC violated provisions of the U.S. Security and Exchange Act.
The lawsuit was filed one day after a similar class-action suit was filed against the company, Burns, and two other LMC executives.
The complaint claims that between October 26, 2020, through March 17, 2021, LMC and burns artificially inflated stock by claiming LMC had as many as 100,000 pre-orders for its all-electric Endurance pickup truck that it planned to manufacture at the former General Motors Assembly Plant in Lordstown.
On October 26, 2020, Burns cited a 40,000 pre-order figure as “pent-up demand” for the Endurance and emphasized that “I don’t think we’ve even scratched the surface,” according to the complaint.
The lawsuit says LMC stated in November that the pre-orders had reached 50,000, and 100,000 by January.
The complaint claims that the company didn’t reveal that “a substantial amount” of the pre-orders were from customers that didn’t operate commercial fleets or have the financial means to purchase the trucks.
The suit claims that an unnamed former LMC employee claimed that production of the Endurance was at least three to four years away.
Citing a report issued on March 12 by short-seller Hindenburg Research titled “The Lordstown Motors Mirage: Fake Orders, Undisclosed Production Hurdles, and a Prototype Inferno,” the LMC share price fell 17% that day.
The “Prototype Inferno” referenced a January incident where an Endurance prototype was destroyed by fire near LMC’s development center in Farmington Hills, Michigan.
LMC stock fell again to $13.01 on March 17 when the company announced a net loss of $101 million in the fourth quarter of 2020, and CEO Burns revealed that the Securities and Exchange Commission had made inquiries about the matters described in the Hindenburg report.
"I can't speak to the report but I can tell you two things - we're at betas in 10 days and we're going to start production of the world's first electric pickup," said Burns following the release of the Hindenburg report. "There are always haters...I quoted Taylor Swift to someone the other day, haters gonna hate, hate, hate...you gotta shake it off."
The complaint asks the court to declare the lawsuit a class action, allowing other investors to join as plaintiffs. There could be hundreds or thousands who could be eligible to join the lawsuit, according to the complaint.
The suit seeks an unspecified amount of damages to be determined by a jury.
Lordstown Motors has not filed a response to either lawsuit in court.
The public relations firm that has been representing LMC has not responded to 21 News’ requests for statements on either lawsuit.
When asked about the first lawsuit, CEO Steve Burns said he did not wish to make a statement but would comment when Endurance production begins in September.
As for the SEC investigation, Burns says LMC is cooperating and would have nothing more to say until a committee created by the company had completed its review.