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The Division of Justice has opened an investigation into struggling electrical car startup Workhorse, based on The Wall Avenue Journal. The probe is reportedly being led by the US Legal professional’s workplace for the Southern District of New York, which regularly investigates monetary crimes.
Workhorse is already a part of an investigation from the Securities and Change Fee that first got here to mild in September, when short-selling analysis agency Fuzzy Panda launched a report accusing the EV startup of fraud. It’s the third EV startup beneath investigation from each businesses, following Nikola (whose founder was indicted on fraud fees earlier this yr) and Lordstown Motors (which Workhorse has deep ties, too). Each of these startups got here beneath investigation after Hindenburg Analysis, one other short-selling analysis agency, revealed studies crammed with accusations of fraud.
The startup, an Ohio-based maker of economic electrical supply automobiles, has struggled mightily the previous couple of years because it fought for — however in the end misplaced — the contract to construct the next-generation mail truck for the US Postal Service. That contract as a substitute went to Oshkosh Protection. Workhorse protested the choice within the US Court docket of Federal Claims earlier this yr, however abruptly dropped the lawsuit in September.
Workhorse has additionally had bother with its flagship car, the C-1000. After lastly getting it into manufacturing in August, the corporate instantly stated it wanted to revamp the van. In September, it stopped transport them altogether and recalled all 41 that had been delivered. The startup’s govt ranks have turned over lately as properly, with CEO Duane Hughes departing in July and CFO Steve Schrader leaving in October.
The Fuzzy Panda report revealed in September contained allegations that Workhorse lied concerning the validity of among the orders it had collected for its supply car, and that the startup could have additionally dedicated accounting fraud.
All through all this turmoil, Workhorse has largely survived on loans from hedge funds. It has put up a lot of its mental property as collateral for these loans and stands to lose loads within the occasion of a default.
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