Investors accuse construction tech firm of self-dealing scheme

MANHATTAN (CN) — AI-driven construction technology and equipment rental company EquipmentShare uses a web of more than 100 family-owned and affiliated entities to reap tens of millions of dollars of profits through undisclosed self-dealing, investors claim in a class action filed in New York federal court.

Led by class representative Jupiter Parra, the class of investors claims EquipmentShare’s stock fell 11.7% to close at $19.69 on June 25, the day after Umibōzu Research released a report that accused the company’s leadership of self-dealing and misleading the market about its business model.

The report — titled “EquipmentShare: Relentless Self-Dealing, a Tech Veneer, and the Missouri ‘Cult’ That Started It All” — suggested the company’s financials would not prevail against SEC and IRS scrutiny, citing one former insider who purportedly called one of EquipmentShare’s subsidiaries “Ponzi-adjacent.”

Represented by attorney Rebecca Dawson, from Glancy Prongay, the class seeks recovery of investor losses and unspecified damages stemming from the company’s material misrepresentations and omissions concerning related-party transactions.

Filed in the U.S. District Court for the Southern District of New York on Thursday evening, the class action is comprised of four counts of federal securities law violations against the Missouri-based company itself and its individual directors and officers, including CEO and co-founder Jabbok Schlacks and CFO David Marquardt.

The investors accuse the company’s board of directors of knowingly concealing ongoing equipment sale and rental transactions with entities owned by the company’s co-founders. Those deals delivered at least $77 million for companies linked to EquipmentShare co-founders, the investors say.

“Because of their positions and access to material nonpublic information available to them, the individual defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading,” the investors write in the complaint.

The investors say they purchased securities at artificially inflated prices, noting the company’s shares opened to the public at a price of $24.50 in an initial public offering that netted EquipmentShare approximately $706 million.

Parra purchased more than 100 shares of EquipmentShare stock in February at a unit price of $32.55. He believes the class of affected investors could be comprised of “at least hundreds or thousands of members.”

Representatives for EquipmentShare did not immediately respond to request for comment Friday morning.

As of Friday, the company’s stock price, which trades on the NASDAQ under the ticker EQPT, settled at around $19.24.

Earlier in July, EquipmentShare released an updated financial forecast that raised the company’s rental segment revenue growth outlook from 29% to 33%, citing “continued strong customer demand, sustained fleet utilization, disciplined execution and better-than-expected financial performance through the first half of the year.”

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