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Lawsuits allege that Faraday Future fabricated early sales.

According to two internal whistleblowers at Faraday Future, the troubled electric vehicle (EV) manufacturer has fabricated some of the limited sales it has disclosed thus far. Furthermore, they assert that Jia Yueting, the company’s founder, has “weaponized” the HR department of the EV startup to sabotage anyone who exposes these alleged misrepresentations.

Jose Guerrero and Victoria Xie, two employees, have recently initiated legal proceedings in Los Angeles Superior Court against Faraday Future, Jia, and the organization’s HR head, Nan Yang. The lawsuits contain the following allegations: wrongful termination, breach of contract, and infliction of emotional distress.

Furthermore, both lawsuits shed light on the central dispute surrounding Faraday Future: the purported persistence of its founder, Jia, in exercising authority over the organization, notwithstanding his exclusion in 2022 due to an internal inquiry.

In an effort to conserve the meager cash on hand, Faraday Future has continued to curtail and lay off employees; in fact, the company was on the verge of eviction from its Los Angeles headquarters for multiple delinquent lease payments. The company had not previously disclosed the aforementioned lawsuits. This is all happening while the Securities and Exchange Commission and the Department of Justice are actively investigating the company.

“FF takes extremely seriously the allegations made by former employees in these two lawsuits,” a Faraday Future spokesperson said in an email. “FF is adamant that it has robust defenses against the alleged allegations, including character attacks, and will pursue all available avenues and remedies to protect and defend itself and the company’s devoted employees against all allegations.”

Jia stated in an email to Eltrys: “I am convinced that the aforementioned complaints contain a multitude of fraudulent statements and defamatory allegations.” I intend to file countersuits against the involved parties.”

Guerrero and Xie declined to comment further on the allegations made in the filing via counsel.

False sales allegations and retaliatory actions
Guerrero and Xie claimed in an internal whistleblower letter to the company’s general counsel dated December 6, 2023, that Faraday Future fabricated the first four sales figures it publicly disclosed for the FF91 electric SUV.

Guerrero, a former Faraday Future senior director of sales and after-sales, and Xie, the organization’s “go-to-market project manager and launch manager,” assert that the company made public these shipments prior to the conclusion of the sales process. They assert that, at least at the time the whistleblower letter was submitted, three of the four were never completely paid for, and that the fourth was only paid for “more than sixty days after the’sale’ was announced.” Since then, Faraday Future has reiterated its promise to deliver ten vehicles in 2023.

According to Guerrero and Xie, the leadership team in Jia’s department “persisted in citing the necessity to announce sales in order to increase the company’s share price” and “retaliated against staff who raised compliance concerns with retaliatory HR actions” when sales staff opposed these “premature” announcements.

Guerrero and Xie further assert that one of Jia’s lieutenants disregarded concerns regarding the fact that Faraday Future executed these sales agreements with its initial customers without performing pre-delivery inspections on the vehicles. They claim that they forced the sales team to submit DMV paperwork “without the necessary cash payments and insurance.” The individuals additionally assert that Jia’s team potentially violated the Transportation Recall Enhancement, Accountability, and Documentation Act by sending “non-road-approved software” to these early customer vehicles and failing to adequately document or disclose the software’s release notes to the National Highway Traffic Safety Administration.

Moreover, they assert that Faraday Future has been repairing early customer vehicles without the appropriate paperwork or work authorization, which, according to him, could jeopardize the company’s license with the California Bureau of Automotive Repair.

They assert in the lawsuits that “[Defendant Mr. Jia] and his trusted coterie inquired about regulatory requirements with the explicit intention of ‘creatively’ circumventing the rules.”

According to Xie’s complaint, Jia and Yang were directly involved in her termination, which she claims happened “in retaliation for her protected whistleblowing” just two days after the letter’s submission. The complaint reads that on December 22, Xie made an endeavor to submit an arbitration claim against the organization. However, Faraday Future failed to pay the required arbitration fees within the allotted thirty days, allowing her to file a lawsuit in Superior Court, according to the complaint.

On January 18, Faraday Future allegedly terminated Guerrero in retaliation for his statements, as per his complaint. Likewise, he initiated an arbitration petition against the organization, and when Faraday Future failed to remit the associated costs, he was granted the same liberty to initiate a litigation proceeding in Superior Court.

Jia’s authority over Faraday Future has historically been a contentious matter. Although the company lists another individual as its CEO on paper, Jia ran the company in secrecy during its infancy, as previously reported. Although he ultimately assumed the position of CEO, he appointed a former BMW executive to that position in 2019 in an effort to appease investors. The company’s eventual public offering in 2021 was a merger with a special-purpose acquisition company.

Following an internal investigation that began in the latter part of 2021, Jia received a reprimand. The inquiry examined allegations made by a short-seller that Faraday Future had inflated the quantity of preorders for its vehicles, in addition to deficiencies in the company’s founder’s financial transactions that were not adequately disclosed. While under investigation by the SEC and DOJ, individuals with close ties to Jia orchestrated a boardroom rebellion in 2022.

Guerrero and Xie assert in their lawsuits that Jia “directs a shadow organization” that determines the fate of the company, despite the fact that he is not yet the CEO. They claim that he and his trusted lieutenants convene almost every week at one of the mansions he has acquired along the Pacific coast.

“In the lawsuits, they assert that Jia directs and approves all significant operational decisions pertaining to key business functions, such as financial services, human resources, budget allocations, and vehicle release.”

Guerrero’s lawsuit and Xie’s lawsuit are both available here.

Juliet P.
Author: Juliet P.

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