The Department of Justice opened an investigation into Lordstown Motors, a troubled startup in electric vehicles. It is backed by General Motors. The company went public last year, but it has not yet produced its pickup, the Endurance, according to The Wall Street Journal. This is the second probe into the startup. The Securities and Exchange Commission launched an investigation earlier in the year into misleading claims made by Lordstown Motors executives about the Endurance's preorders.The US Attorneys Office in the Southern District is conducting the new investigation. This comes weeks after Lordstown Motors founder and CEO was forced out by a law firm following an investigation into misleading claims. At that time, the chief financial officer of the startup and other executives and staff close to him were also fired.Newly-publicized EV startups are now under intense scrutinyA representative of Lordstown Motors stated that the company is open to any inquiries or regulatory investigations. We are looking forward to closing this chapter so our new leadership team and dedicated team can concentrate solely on the Lordstown Endurance, an all-electric pickup truck.Although it is not clear what the Justice Department is looking into, SDNY tends to focus on financial crimes or allegations of fraud. The DOJ is currently investigating Nikola, an electric trucking startup. Canoo, a fellow EV startup has been opened to scrutiny by the SEC. The SDNY press office did not respond immediately to a request for comment.After leaving Workhorse, his previous startup, Steve Burns founded Lordstown Motors. Lordstown Motors was essentially his attempt to purchase a former plant in Lordstown where GM used to build the Chevy Cruze. GM also owned a share of the company.Trump's administration praised the purchase and the startup. Donald Trump, then-President, said Lordstown Motors' purchase of the factory was GREAT NEWS. He later featured the startup at an event at the White House. Mike Pence, former Vice President, was even present at the Endurance reveal in June 2020.Lordstown Motors was hoping to gain an advantage over other startup factories by purchasing the GM factory. Burns also found one for the truck as he licensed intellectual rights for an electric pickup Workhorse had created but never put into production. This deal was worth millions of dollars to his former company.Lordstown Motors, one of many electric vehicle startup founders, went public in 2020 by merging with an acquisition company for special purposes. This process helped the company raise $675 million. Burns and the company claimed that they had received around 100,000 preorders to the Endurance by the end of 2020 and early 2021.In March, Hindenburg Research, a short-selling research company, published a report accusing Lordstown Motors, among other things of faking preorders and sourcing vehicles to fleet brokerage companies that couldn't afford the amount of vehicles they wanted to purchase. Burns initially refused to back down, claiming that there are always people who hate and quoting Taylor Swift's Shake it Off to local media outlets. Soon thereafter, the company revealed the findings of the SEC probe to the media and began its own review.Lordstown Motors acknowledged in May that it required more money to survive. It lowered its goal of producing 2021 vehicles. It also announced that its second vehicle, an electrical van, has been halted and that it has not received enough funding to continue production until May 2022.Lordstown Motors raised $675 Million in the second half of 2020, but still needs more cashIn June, a review was conducted by a law office with connections to Lordstown Motors. The review revealed that Burns and others had made misleading claims regarding preorders. He resigned.Lordstown Motors appointed Angela Strand, a former Workhorse executive to act as interim CEO. According to a recent filing, she is being paid $100,000 per mois to fill the role while the company searches for a permanent replacement.
