The co-founders of Electric Last Mile Solutions (ELMS), an EV startup focused on fleet markets, have resigned from the company after they were found to have improperly purchased company equity.
ELMS CEO James Taylor and Chairman Jason Luo announced their resignation from the company Tuesday in a press release shared to the company’s website. Taylor and Luo were the subjects of an investigation conducted by the company’s board, which found they “purchased equity in the Company at substantial discounts to market value without obtaining an independent valuation.”
Taylor and Luo allegedly orchestrated the improper equity purchase in the fall of 2020 as the company prepared for a stock market listing the following summer, which was enabled through a merger with a blank check company called Forum Merger III Corporation. At the time, Luo owned 100 percent of ELMS shares and orchestrated the purchase of nearly 85,000 shares through entities tied to Taylor and him. The shares were purchased for $10 a share, however the stock price of ELMS eventually rose to a high of $14, potentially allowing Taylor and Luo to bank a significant windfall.
“Based on the Special Committee’s investigation, the Company has concluded that in November and December 2020, shortly before the Company’s December 10, 2020 announcement of a definitive agreement for a business combination with Forum Merger III Corporation, certain Electric Last Mile Inc. executives purchased equity in the Company at substantial discounts to market value without obtaining an independent valuation,” the press release said. “Mr. Taylor purchased equity in these transactions. Mr. Luo participated in these and other transactions and directly or indirectly purchased and sold equity in such transactions.”
The release indicated Taylor would be replaced by Interim CEO and President Shauna McIntyre, while ELMS Board Member and CEO of data firm CDK Global, Brian Krzanich, will replace Luo.
ELMS has emerged as an unlikely competitor to GM’s BrightDrop logistics sub-brand and plans to offer a variety of battery-electric utility vans and trucks to fleet customers. The company is currently producing a Class 1 electric van called the Urban Delivery EV at a plant in Mishawaka, Ind., which is based on an existing Chinese van platform from a company called Sokon, and will eventually introduce a Class 3 EV commercial heavy truck, as well.
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