Evolv, the technology company behind the Adams administration’s controversial subway system weapons scanner program, disclosed Friday that some of its employees have “engaged in misconduct” during business deals — an announcement that comes as the firm is facing several federal and local investigations. In a statement, the Massachusetts-based Evolv said an internal review has concluded the misconduct pertains to “extra-contractual terms and conditions” appended to certain sales of the company’s products between the second quarter of 2022 and the second quarter of this year. The sales in question involved one of Evolv’s “largest channel partners,” according to the statement. The employees involved in the misconduct withheld information about “extra-contractual” matters from Evolv’s accounting and auditing divisions, resulting in the company incorrectly reporting between $4 million and $6 million in revenue over the period that shouldn’t have been realized, the statement says. Evolv added it will be correcting past publicly filed financial statements and delay the submission of its most recent one, covering the period ending Sept. 30. An Evolv spokeswoman wouldn’t identify the employees engaged in the misconduct or the client in question. She also wouldn’t elaborate on the nature of the misconduct. “The company will provide an update as soon as it can,” said the spokeswoman, Alexandra Ozerkis. “In the meantime, we remain focused on serving our customers and committed to our mission of making people and places safe. The fundamentals of our business remain strong.” Following the announcement, Evolv’s stock price took a nosedive on Wall Street, having plunged nearly 40% as of noon Friday. Mayor Eric Adams points out a weapon that was caught by an Evolv weapons detections system during a press conference announcing weapons detectors for the NYC subway system in the Fulton Transit Center on March 28, 2024 in Manhattan. (Barry Williams for New York Daily News) The announcement from Evolv comes as the company remains under investigative scrutiny. The Department of Investigation, the city government’s internal corruption watchdog, is probing a decision by Mayor Adams’ administration to enter into a pilot program with Evolv that involved the company deploying its weapons detectors in the city subway system to scan riders at turnstiles. Among other matters, sources say the DOI investigation’s scrutinizing vetting the administration did before giving that deal to Evolv, whose sales team includes Dom D’Orazio, a former NYPD executive officer who worked in Patrol Borough Brooklyn South at the same time as Phil Banks, Adams’ recently resigned deputy mayor for public safety, who also attended Evolv lobbying meetings with D’Orazio.  This week, the NYPD announced the 30-day Evolv pilot turned up 12 knives and no guns over the course of 30-day pilot, which was voluntary in nature, meaning riders could opt to not walk through the scanner and still enter a subway station at another turnstile. The NYPD also said Evolv’s scanners registered 118 false positive scans over the period. The pilot results came after the mayor said in late August, after the pilot’s conclusion, that the results of the testing underground had been “very impressive.” Adams administration officials haven’t said how they view the pilot data in terms of success or disclosed exactly what questions they were hoping to answer with the trial run. evolv gun detectorA security screening device by Evolv Technology outside City Hall on May 17. (Barry Williams for New York Daily News) The mayor’s office and the NYPD have not ruled out entering into a long-term contract with Evolv for subway gun detection scanners, though they said Thursday the city hasn’t relied on the company’s technology since the pilot concluded. The mayor’s office and the NYPD didn’t immediately return messages seeking comment Friday. “The recent report that some Evolv employees engaged in misconduct that resulted in misleading company financial statements is yet another reason for this failed project to be permanently shelved,” the Legal Aid Society, which has  raised civil rights concerns about the subway gun detectors, said Friday. “Any action by City Hall to further implement the use of Evolv scanners … would be reckless and would further risk unnecessary and tense interactions between police and all New Yorkers who rely on public transit.” Separately from the DOI matter, the U.S. Securities and Exchange Commission and the Federal Trade Commission are investigating whether Evolv in public materials and communications with investors overstated the ability of its technology to differentiate between dangerous weapons and innocuous metallic objects. Those investigations are ongoing, and Evolv said in Friday’s release that it has turned over information to the SEC’s enforcement arm about the identified misconduct. Evolv hasn’t been accused of any wrongdoing by law enforcement officials. Separately, the Adams administration is ensnared in various corruption investigations led by the offices of the U.S. attorneys in Manhattan and Brooklyn. Adams is under federal indictment on criminal charges alleging he took bribes and illegal campaign contributions from Turkish government operatives in exchange for political favors. He has pleaded not guilty in that case. In addition, a dozen high-profile administration officials, including Banks, have resigned in recent weeks after getting their devices seized and homes raided as part of several federal corruption probes looking into whether city officials were involved in influence peddling and kickbacks on city contracts. There’s no public indication Evolv’s being looked at as part of those probes. With Evan Simko-Bednarski