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Commentary: After bagging Milton, who will feds go after next?

Other SPAC-backed transportation startup founders under government scrutiny

Lordstown Motors Corp. founder Steve Burns resigned from the startup amid federal investigations. (Photo: Lordstown Motors)

“It’s the lure of easy money, it’s got a very strong appeal.” — Smuggler’s’ Blues by Glenn Frey

After convicting SPAC-sponsored Nikola Corp. founder Trevor Milton of defrauding investors, who will federal prosecutors target next among transportation companies that took a similar path to public trading?

They have options. A statement by U.S. Attorney Damian Williams suggests some targets of Securities and Exchange Commission and Justice Department subpoenas may have cause for worry.

“Let this case serve as a warning to anyone who plays fast and loose with the truth to get investors to part with their money,” Williams said. “It won’t end well.”


At least two companies in the electrified truck transportation space are under government scrutiny. Both raced to go public via special purpose acquisition companies in 2020.

The Mahoning Valley shuffle

Before Taiwan’s Foxconn purchased most of the assets of financially ailing Lordstown Motors Corp., the startup hatched by former Workhorse Group CEO Steve Burns, had moments of high-flying stock trading.

In 2019, Burns convinced General Motors to sell him a shuttered 6.2-million-square-foot car assembly complex in northeast Ohio’s Mahoning Valley. GM even provided a mortgage to Burns. And it loaned him $20 million to retool the plant for his battery-powered commercial pickup truck called Endurance.

Struggling to find money to launch, Burns leaned into the SPAC frenzy, agreeing to merge with DiamondPeak Acquisition Company. Just 11 weeks later, Lordstown was trading publicly on the Nasdaq. The $1.6 billion transaction gave the startup $675 million of gross proceeds.


Retail investors piled in, following Burns’ claims that the company had attracted 100,000 orders. The stock touched $29 a share.

Hindenburg, again

Enter Hindenburg Research, the short seller that claimed Milton built Nikola on “an ocean of lies.” In March 2021, Hindenburg proffered that Lordstown was a “mirage” of fake orders and obfuscations. By July 2021, the Justice Department issued subpoenas. The SEC earlier launched its own investigation.

Burns and CFO Julio Rodriguez resigned a month earlier following an internal investigation. Burns’ successor, Daniel Ninivaggi, arranged the sale of the plant to Foxconn for $230 million. He agreed to let Foxconn contract manufacture the Endurance. The truck began early production in September, nearly two years later than Burns projected.

GM, which walked away from a tentative $2 billion investment to build Milton’s phantom Badger electric pickup after the Hindenburg expose, invested $25 million in cash and converted the Lordstown plant mortgage to an in-kind contribution in Lordstown’s SPAC deal. 

Other than a rumored sighting near the Lordstown display at the Work Truck Show in Indianapolis in March, Burns has said nothing. Neither the SEC nor the Justice Department have filed charges. Both investigations continue.

Insider trading at ELMS

Another internal board investigation — this one at SPAC-backed electric delivery van startup Electric Last Mile Solutions — revealed that co-founders, Chairman Jason Luo and CEO Jim Taylor, purchased heavily discounted shares before a merger with Forum Merger III Corp.  

ELMS went public in June 2021 following a December 2020 merger. The deal was valued at $1.4 billion. ELMS received $379 million in gross proceeds when the business combination closed.

The board removed both veteran automotive executives. Taylor had a long career at GM before running Workhorse under Burns. Luo was a former president of Ford China.


The company accused Taylor of failing to repay company shares purchased through insider trading that was part of his separation agreement.

SEC launches probe

In March, the SEC launched a probe into ELMS’ split with Luo and Taylor and its ability to deliver on promises made to investors. At the time, ELMS said it would cooperate fully with the SEC investigation. In June, the company filed for Chapter 7 bankruptcy liquidation.

In September, Mullen Automotive agreed to pay $55 million for ELMS’ assets, including inventory, intellectual property and the former GM Hummer plant in Mishawaka, Indiana, according to TechCrunch. ELMS assembled van bodies imported from China with electric chassis before it ran out of money.

Nikola founder Trevor Milton guilty on 3 fraud counts

Reports: Justice Department investigating Lordstown Motors

Electric Last Mile Solutions files for bankruptcy liquidation

Click for more FreightWaves articles by Alan Adler.

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Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.