Struggling Faraday Future and its founding investor Jia Yueting are facing financial and legal woes that threaten the company’s existence.
Jia specifically has been placed on an official list of debt defaulters on a website run by the Chinese government after the LeEco founder failed to follow a court order stipulating he pay a debt of more than 470 million yuan ($71 million) to a securities company.
The China Securities Regulatory Commission has also issued an order for Jia to return to China to provide financing for one of his other struggling companies.
DON’T MISS: Bowing to inevitable, Faraday Future scales back plant plans (Feb 2017)
According to Reuters, Jia and his tech conglomerate LeEco have both been treading water financially since a rapid 2016 expansion left the company in a cash crunch.
Leshi, the video-streaming unit of LeEco, is also in dire straits after trading of its shares were halted in April. Jia stepped down as CEO of that group a month later.
In the United States, The Verge has shed some light on the publicly opaque executive structure and troubled finances of Jia’s electric-vehicle startup, Faraday Future.
The report—which is very much worth reading in its entirety—paints a picture of mismanagement, iron-fisted control, and hubristic decisions made by Jia and his right hand at Faraday Future, Chaoying Deng.
Deng “has held many different titles at the company, but lists herself as the company’s vice president of administration on LinkedIn,” says the report.
At multiple points over the last four years, Deng has been listed as the company’s CEO, president, and secretary, yet she had no background in the automotive industry before Faraday Future
The Verge cites sources close to the company’s financials for its report, some of whom say Faraday Future’s financials were directly controlled by Deng.
Deng had more control over that money than the company’s finance directors, multiple former employees say. “She wouldn’t allow [them] access to it,” one former employee close to the company’s finances says. “Chaoying is the gatekeeper,’” another says.
There’s also the matter of one Ocean View Drive, Inc. a company set up to buy three mansions in Rancho Palos Verdes, California, which lists Deng as both chief financial officer and secretary.
The company owns the mansions, which Jia and Deng use as their homes in California.
Both Jia and Deng attempted to use the mansions as collateral for a loan to Faraday Future, but the company’s finance team stopped the effort as the assets weren’t owned by the electric-car startup.
Aside from the shoddy financial situation, numerous lawsuits plague Faraday Future, including one for an outstanding $100,000 bill for catering during its FF91 reveal at CES in January.
This week, a Chinese court seized 1.3 million yuan ($200,000) in bank deposits from Jia to honor unspecified obligations to a securities firm. It is reportedly eyeing his shares in Leshi and other financial assets as well.