Saleen Is Suing A Guy On Reddit For Calling Them A Scam

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Saleen Automotive, purveyor of modified Mustangs, super-gorgeous supercars and various other machinations over the years, has been in financial trouble for some time. This isn’t exactly new information. But now Saleen is suing someone for saying that there are worse things going on — possibly even illegal financial schemes, this person alleges.

Frederic Lambert, who lives in Quebec and is known on Reddit as user FredTesla, is a moderator on Reddit’s r/TeslaMotors forum. In his spare time, he also posts on the website InvestorHub, which hosts forums discussing all sorts of various stocks.

Much of the conversations on the site are relatively innocuous, as these things go. Whether or not a stock will move up or down, a company’s financial progress, that sort of thing.


But Saleen’s lawsuit, filed in Canadian court, claims that Lambert accused the company on both InvestorHub and Reddit of conducting a pump-and-dump scheme; basically, when shareholders in a company promote a stock for no other reason than to sell all their own shares once people start buying into it.

Saleen also claims Lambert accused them of running a derivative of a Ponzi scheme, where an executive uses the money of later investors to pay off people who got in earlier.


In an e-mail to us, Steve Saleen said that the purpose of the suit was simply to stop Lambert from making false accusations:

“In short, these proceedings simply seek to prevent Mr. Lambert from disseminating any further false and defamatory comments with respect to Saleen Automotive, Inc. or myself,” he said in the email. “These defamatory comments are simply untrue and are negatively impacting Saleen Automotive’s reputation as well as mine.”


He continued: “This lawsuit has nothing to do with Tesla or any other opinions and comments regarding our products. Under Canadian law, everyone is entitled to his or her opinion and may voice same, as long as it is not done in a defamatory fashion. I understand the extent of one’s freedom of speech and of opinions, but we can no longer tolerate to be the object of such defamatory comments which are not protected by freedom of speech.”

Saleen Automotive says in its lawsuit filings that its recent stock troubles, which has seen the price of its shares tumble from a high of $0.95 a share to just $0.0070 per share, are the direct result of these statements.


The lawsuit alleges Lambert had been making posts about Saleen since at least July 2014 on InvestorsHub. He’s one of the most active members of the board, authoring more than 1,000 comments.

According to the lawsuit, here are some of the things Lambert posted under aliases (referring to articles he wrote himself) on InvestorsHub and his own name on other websites:

As for Steve Saleen and his family, no one can deny that he has been living off shareholders for the past year or so. The stock price has been declining constantly while he accepts large compensations.

Frederic Lambert is not a troll. He wrote articles about Saleen based on verifiable sources that are linked to in the articles.

SLNN is a scam and has always been a scam.

My findings were a lot more alarming than a bad investment opportunity, it instead unravelled stock manipulation among other criminal activities. I shared my findings with the SEC and since then things have intensified.

You are following a shady CEO… this thing is getting uglier every day.

What’s not clear from any of this is how Lambert obtained this information, and the claims cited as defamatory by Saleen cannot be immediately verified.


Saleen claims in their lawsuit that they are not being investigated by the SEC. The company also denies all of Lambert’s “pump and dump” and scheme claims, saying they are libelous. Saleen’s suit claims Lambert’s postings have been extremely damaging to Steve Saleen and his company.

As a proximate result of the Defamatory Postings and the other aforementioned defamatory statements, the Plaintiffs have suffered damages to their reputation, shame, embarrassment, and, possibly, loss of business sales which cannot be assessed, at least for the moment. These ongoing damages are unquantifiable and irreparable.


Saleen’s lawyers traced the online postings back to Lambert, and to his website BlackSheepPlanet’s last post, dated May 14, 2015, noted that the company’s share price had fallen nearly 84% year-to-date up to that point.

When he sent us his copy of the lawsuit, Lambert told us that he already believes Saleen’s lawyers have already selectively edited his online comments for their own benefit in their claim against him:

They complained that I said:”something closely resembling a Ponzi scheme”.

I said that about the way they utilize their deposits for vehicles. If you look at Saleen’s recent 10K page 5, they say that they used $1.7 million in customer depost is to finance their operations. So that money wasn’t use toward building the cars customers put down deposits for (COGS), but toward operating expenses.

Which is not great, but not illegal unless you don’t have money at all to build cars, which as Saleen says in their last 10K, they are down to $21,000.

So basically, they collect money from customers promising them cars, but then instead of spending that money toward chassis, parts and labor, they spend it in operating expenses (which for Saleen are all over the place) and then they rely on more customers to place deposits in order to build the cars ordered by previous reservation holders. Much like a ponzi scheme where they rely on more investors coming in to pay for the interest of previous investors.


One of the posts in question by Lambert on Reddit additionally alleges that Saleen was lying in order to sell its own version of the Tesla Model S, now known as the Saleen ST.


Lambert went to Reddit yesterday to alert other members that he’d been hit with a lawsuit by Saleen and founder Steve Saleen seeking an injunction and suing him for defamation that supposedly resulted in the downward spiral of the company’s stock.

In the thread, Lambert said he’s just a guy on the Internet, and that his beef with the company is mostly focused on his opinion that it’s not a good stock buy:

I’m a small time Tesla investor and I researched Saleen as an investment opportunity when they announced they were doing the “Saleen Tesla” early last year. After pretty standard due diligence it became clear to me that it was a bad investment (that was early last year when the stock was at $0.30 now at $0.0006).

I posted my general thoughts and findings on iHub, a website with message boards mainly for the OTC market. I was met with a barrage of critics and attacks, mostly empty arguments. I started responding to these critics, which were clearly meant to pump the stock, and started digging more into the filings, the history of the company and more especially on the claims they were making about Tesla. I started posting on here (Reddit) because posts about Saleen came up a few times. And also on blogs.

Here’s the reddit thread they included as an exhibit (P-9) in the motion: Is Saleen lying in order to sell its version of the Tesla Model S?


Possibly making things worse, he also alleged that Saleen’s lawyers are already being sloppy with the suit:

They say that in this thread I “urged potential buyers of the Saleen Tesla vehicles to reconsider their decision in a disparaging comment which started with the following statement: “Saleen is running something closely resembling a Ponzi scheme/pump&dump”.

And you know what? I don’t know if this can have an impact on the case, but I never said that in that particular thread. Meaning the whole exhibit P-9 is a printout of the thread and it missing that particular quote.

I did say that in another thread though, but almost a year apart and I stand by it.


And then Lambert doubled-down on his original allegations:

Like I explained in the comment, Saleen is taking deposits from customers, but they don’t use the money to build cars or at least only a fraction of the money, therefore they always depends on more people giving deposits, but if they all come back wanting their cars, Saleen doesn’t have the money to build them - not unlike a ponzi scheme.

They mention this reddit thread and a few blogs I wrote, but in each case, all my statements are backed by valid sources.

One of the most outrageous claims they make in the motion is that my posting on iHub increased in April this year, then the volume on Saleen’s stock increased and the price crumbled. They are implying that my increased posting on the stock incited people to sell and therefore the volume increased and the price decreased.

But this is complete bullshit. Like I said earlier, Saleen’s convertible notes started maturing in April which brought a ton of new shares on the market at a 38 to 40% discount so of course the price would fall. Blaming that on me is ridiculous. And yes, although I don’t have the statistics, I assume my posting increased during that period, but that’s because the whole board became flooded by pumpers, presumably from the noteholders trying to unload their newly converted shares. What I do on this board is respond to the pumpers with facts, so of course more pumpers = more posts to respond to.


Lambert is still dealing with the suit itself, and posted again on Reddit to draw attention to the issue, and solicit donations for his defense against Saleen.

Saleen, as a company, has had troubles over the past few decades, to be sure. It’s endured lawsuits, multiple changes in ownership, rumblings of bankruptcy, and notes in its own financial statements that the company’s future is in doubt. Saleen has repeatedly had to put in statements in its financial filings with the Securities and Exchange commission like this one, out of its most recent 10K filing:

We have a history of losses and negative cash from operations and our current cash resources and revenue levels are insufficient to meet our planned business objectives, production and operational needs and debt obligations without additional financing. In addition, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. We may be unable to obtain additional capital required to implement our business plan, which could restrict our ability to grow and increase stockholder value.


All that being said, a company with a rocky road to success isn’t necessarily a bad investment, and that definitely doesn’t mean it’s doing anything illegal. Lambert’s allegations may be false, or they may have the ring of truth to them. We really don’t know. A defamation case can be hard to prove, just like Lambert’s allegations can be difficult to prove. But we might just find out when it all goes to court.

Here is the full text of the lawsuit: