Nikola founder Trevor Milton stands trial for fraud, capping stunning rise and fall

Nikola founder Trevor Milton stands trial for fraud, capping stunning rise and fall

US Nikola CEO and Founder Trevor Milton speaks during the presentation of his new all-electric battery-powered and hydrogen fuel cell trucks in partnership with CNH Industrial, at an event in Turin, Italy, on December 2, 2019.

Massimo Pinca | Reuters

The founder of electric tractor-trailer maker Nikola Motor is on trial on fraud charges related to statements he made about the company’s technology and products, statements that federal prosecutors say were exaggerated and misleading.

The US Attorney’s Office in Manhattan alleged that Trevor Milton, who founded Nikola in 2014, lied about “almost every aspect of the business” while he was the company’s chairman and CEO. Those lies were intended to bolster sales of the startup’s stock, prosecutors alleged in indictments issued in 2021 and earlier this year. Milton denied the charges.

“He lied to trick innocent investors into buying his company’s stock,” Assistant U.S. Attorney Nicolas Roos said in opening statements in U.S. District Court in New York on Tuesday. “On the back of those innocent investors duped by his lies, he became a billionaire virtually overnight.”

The trial began Monday with jury selection and began Tuesday. Prosecutors told prospective jurors that the proceedings are expected to take about five weeks.

The trial caps an astonishing rise and fall of Nikola under Milton.

The company’s stock price briefly jumped to over $90 per share in June 2020, days after it went public via a merger with a special purpose acquisition company (SPAC). The surge in stocks made Nikola – a company that had no revenue at the time – more valuable than Ford Motor.

But its shares fell sharply after Milton was kicked out of the company in September of that year, following allegations of fraud by short seller Hindenburg Research. The Securities and Exchange Commission and the United States Department of Justice opened investigations after Milton’s departure; he was indicted on three counts of fraud by a grand jury in July 2021. Prosecutors added a fourth count in June.

Shares of Nikola closed at $5.03 apiece on Tuesday.

Milton faces two counts of securities fraud and two counts of wire fraud, all related to statements he made about Nikola’s activities while he was the company’s chairman and CEO. If convicted, he faces up to 25 years in federal prison.

Milton’s attorney, Marc Mukasey, said Tuesday that Milton was seeking to convey a vision for the future of trucking, not to mislead investors. Mukasey said the defense planned to speak with other Nikola executives, including the company’s general counsel, who had endorsed Milton’s statements.

Nikola himself does not face charges in this case. The SEC filed civil charges against the company last year, but that case was settled in December after Nikola agreed to pay a $125 million fine. Milton still owns Nikola stock, but the company has otherwise cut ties with its founder.

Here is what Milton is accused of:

Prosecutors allege Milton made “false and misleading statements regarding Nikola’s product and technology development” as part of a “plan” to induce retail investors to purchase Nikola stock. Prosecutors allege:

  • Milton said the company’s first semi-trailer prototype, called the Nikola One, was “fully functional” – but it wasn’t.
  • A video showing the prototype truck apparently driving under its own power was created by rolling the truck – which could not drive on its own – down a hill.
  • Separately, Milton claimed that Nikola designed and built an electric pickup truck called Badger, entirely by herself, after years of work. But, according to prosecutors, the Badger was little more than “conceptual sketches and renderings” at the time of Milton’s initial statements.
  • While the company eventually showed off a prototype Badger, the show truck was actually built by third-party vendors and based on a truck from a major automaker.
  • Milton also told investors that Nikola was producing hydrogen gas – needed to refuel its fuel cell trucks – at a reduced cost; that Nikola had developed batteries for electric vehicles in-house; and that Nikola had binding orders representing “billions of revenue” for its electric trucks. All of these statements were false, according to prosecutors.

Milton is also accused of making similar misrepresentations to the seller of a ranch he bought in 2020, in an attempt to trick the seller into accepting Nikola’s shares as part payment for the purchase.

Prosecutors are expected to begin presenting their full case against Milton to jurors on Wednesday.

—Reuters contributed to this report.

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