Electric vehicle manufacturer Workhorse Group for the first time acknowledged on Monday it was under investigation by federal authorities.
The Loveland-based company also disclosed for the first time what authorities are looking at: stock trading activity as well as accounting issues.
The company said it was contacted by the U.S. Securities and Exchange Commission on Oct. 19 and Nov. 1, requesting information.
On Monday, the company added the U.S. Department of Justice told it on Nov. 5 notified it had a "related open investigation."
Workhorse became the target of the SEC investigation, as well as multiple shareholder lawsuits, after its shares collapsed in spring when the company lost its bid for a lucrative contract for the U.S. Postal Service.
Shares had soared to as high as $42.96 in early February from $2.45 in early June 2020 on Wall Street perceptions that Workhorse was a front-runner to win all or part of the contract.
An Enquirer investigation revealed that several Workhorse executives and board members sold $60 million in stock before shares crashed. The report further noted company insiders were selling hundreds of thousands of shares after Workhorse had received confidential warning signs as early as September 2020 their bid was in trouble.
As part of its investigation, The Enquirer requested comment in August from the SEC regarding Workhorse officials' trades and submitted to the agency a detailed timeline of stock transactions and Workhorse interactions with postal officials.
To date, the SEC hasn't commented on its investigation.
On Monday, Workhorse disclosed the SEC is specifically "requesting that it voluntarily provide information relating to (a) the events and trading in its securities leading up to the announcement of the award of a contract by the U.S. Postal Service ... and (b) recognition of revenue."
"The company is cooperating with the SEC and DOJ investigations," Workhorse said Monday in a regulatory filing. "At this point, the company cannot predict the eventual scope, duration, or outcome of the above matters."
Workhorse announced the immediate departure of two senior executives a day after The Enquirer's investigation was published. Its new CEO, Rick Dauch, has declined to discuss pending legal matters and says he is focused on turning the company around.
In July, the company delayed plans to ramp up mass production of its vehicles, pending a redesign. In September, Workhorse announced it was recalling 41 vehicles and suspending deliveries of its C-1000 trucks.
The company has promised an update on the review and production plans when it reports its latest financial results in November.
Ohio politicians have expressed concern for the scandals that have embroiled Workhorse and fellow electric vehicle-maker Lordstown Motors, which has come under scrutiny for insiders selling stock as well as inaccurate financial disclosures.
U.S. Sen. Sherrod Brown, D-Ohio, chided Workhorse officials for "padding their own pockets," while Republican candidates for retiring U.S. Sen. Rob Portman – Jane Timken and Josh Mandel – urged further scrutiny by investigators into Workhorse trades by top officials before its stock crash.
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