Elio Motors fined, charged with violating state law

KSLA Investigates: Louisiana puts Elio Motors in the hot seat
Published: Jul. 10, 2017 at 2:10 AM CDT|Updated: Jul. 10, 2017 at 9:06 PM CDT
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BATON ROUGE, LA (KSLA) - The Louisiana Motor Vehicle Commission is accusing Elio Motors of breaking Louisiana law, charging the startup with operating as a manufacturer/dealer of recreational products without a license.

The commission made the decision during a hearing Monday in Metairie in which Elio Motors was given the opportunity to explain and defend its practice of offering reservations for the future purchase of the 3-wheel vehicles.

Attorneys for Elio Motors argued that the practice is not in violation of state law because the reservations are just for spots in line and do not guarantee actual sales.

However, the commission's attorney and executive director pointed to Elio Motors' website and news releases that use words like "buy," "sale" and "own" as evidence of intent to sell.

When asked by the commission chairman where the $27.8 million in reservations for their cars is, Elio Motors' attorney could not say.

Brandt went on to say that he believed the case should be passed on to the state attorney general's office before each side offered their closing arguments. 

Elio Motors faces a $545,000 fine instead of the $7.5 million penalty originally proposed by the commission's attorney.

In addition to a fine, Elio Motors is required to obtain both licenses to manufacture and deal in Louisiana and to place all refundable Elio Motors reservations into a trust account within 60 days. Failure to do all of that will result in a fine of $5,000 for each day Elio Motors is not compliant.

"The reason you need a license is so what's happening doesn't happen," said Gregory Reggie, attorney for the Louisiana Motor Vehicle Commission. "The reason you need a license is so the public is protected from those who would come in and partially do the job."

Elio Motors' attorneys and vice president of governmental affairs, who attended the hearing Monday, declined to comment when asked whether they intend to appeal the Louisiana Motor Vehicle Commission's actions.

"As the LA Motor Vehicle Commission's decision is exclusively between Elio Motors and the State, the Parish has no comment as it relates to this issue," read a brief statement released by the Caddo Parish Commission Monday afternoon.

The company's plans to move into the former GM plant in west Shreveport repeatedly have hit delays.

Likewise, the state commission previously postponed its hearing.

The hearing Monday came nearly two months after the company's CEO, Paul Elio, came to Shreveport for a formal news conference with Caddo commissioners at the old GM plant.

There, Elio promised that his company is still bringing jobs and three-wheel cars to the area.

But that promise is now years in the making.

Elio has been promising those cars as well as 1,500 jobs in Shreveport since 2013, gaining local investors while their section of the old GM plant remains largely empty.

As KSLA News 12's investigations have shown, Elio Motors claimed in its filing with the Securities and Exchange Commission (SEC) in May that it needs to raise $376 million more to stay afloat in the coming year.

Elio, who did not attend the hearing Monday, claims progress is being made but also says he can't give any specific details about that progress without violating SEC rules as a publicly traded company.

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