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Faraday Future says its former GC was a ‘potted plant’: court papers

  • Faraday Future, an electric vehicle company whose CEO has said is on the cusp of going public, was sued by its former general counsel Hong Liu in January over compensation he says he was owed.
  • The company this week said Liu was basically a “potted plant” in his time working there and asked a court to claw back $1.8 million in pay that Liu received.
  • Faraday’s lawyers said Liu oversold his relationships with potential investment partners and came up short on legal expertise.
  • Visit Business Insider’s homepage for more stories.

A lawyer who says he wasn’t paid over $6 million in compensation owed to him for serving as the top lawyer at electric-car company Faraday Future oversold his credentials and sat around like a “potted plant” during his year with the company, the company said.

In legal papers filed on Thursday, Faraday, which has struggled since its 2015 launch and told Reuters last month that it plans to go public by merging with a SPAC, said Hong Liu was an ineffective leader who barely lifted a finger to help the company through disputes with a major investor called Evergrande as well as EVelozcity, another electric-vehicle company.

The company issued a broad denial of Liu’s allegations that it violated its contracts and securities laws and said Liu was barely conversant about corporate finance topics that he should have understood. It said he wasn’t able to work his supposed connections to Goldman Sachs or Blackstone to assist with financing efforts and said he “systematically removed himself from positions of responsibility” over the course of his time at the company.

“It took Liu eleven months into his employment, until January 2019, to provide his first work plan: a useless mishmash of philosophical ramblings devoid of any concrete or measurable steps, tasks, or efforts to meet the vague goals and strategies described therein,” the company said in the court papers.

Liu has said his efforts to assist the company stay within the law were frustrated by its founder and former CEO Yueting Jia, who filed for personal bankruptcy last year. In his complaint, Liu said he was terminated after trying to stop sexual misconduct and immigration law violations at the company, only to be ignored by Jia and his lieutenants.

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Liu says he was promised millions in cash compensation and equity that could have been worth up to $100 million for his service to the company. A good compensation package was the only way he could have been counted on to leave his lucrative role as a partner at Mayer Brown behind, he says.

But Faraday Future said even the $1.8 million Liu was paid was too much. It asked a judge to make him return his compensation.

Faraday has been described as a competitor to Tesla and has been working for years to bring to market an electric SUV called the FF91. Disputes with funders and Yueting’s own bankruptcy have raised eyebrows among some investors, however. The company is now led by Carstein Breitfield, a BMW veteran who took the reins a year ago.

The company is represented in Liu’s lawsuit by the law firm Troutman Pepper.

Amiad Kushner, a lawyer at Seiden Law Group who represents Liu, called the company’s counterclaims “a desperate attempt” to distract from its own lawbreaking.

“Mr. Liu’s complaint speaks for itself, laying bare how the Faraday defendants engaged in securities fraud, breached the unambiguous terms of Mr. Liu’s employment agreement, and retaliated and terminated Mr. Liu in violation of California law,” he said in an email. “Mr. Liu looks forward to revealing the powerful and scathing evidence of defendants’ wrongdoing and prosecuting his claims in a court of law.”

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