Grand jury indicts Trevor Milton, on three counts of fraud
Trevor Milton, the founder of electric-truck startup Nikola, was indicted Thursday on charges of lying to investors by, among other fraudulent claims, pushing a truck down a hill to pretend it was “fully operational.”
Milton repeatedly lied about the capabilities of his
company’s electric trucks and, after the company went public, he doubled down
on lies in a bid to push the share price up, prosecutors alleged Thursday.
Milton also allegedly lied when he insisted on Twitter that
one of Nikola’s trucks was being built entirely with the company’s own
proprietary technology when in fact it was using parts from suppliers in
Michigan and Europe.
“This is a very straightforward case. Milton told lies to
generate popular demand for Nikola stock,” US Attorney Audrey Strauss told
reporters at a press briefing Thursday.
Among the lies Milton told investors were claims he made
about the Nikola One, a semi-truck prototype, according to the indictment. Prosecutors
said Milton knew the prototype did not work and didn’t even have its own
internal power source, but repeatedly called it “fully functioning.”
Prosecutors said at the 2016 unveiling of the truck Milton
made “categorically false” claims about the truck, even though he’d been warned
by the company’s chief engineer that the truck was “not even remotely ready to
operate.”
At the time, the truck could not be driven and it couldn’t
even turn on unless it was plugged into a generator or wall, prosecutors said.
And the dashboard, which Milton pretended to use to start the truck at the
event, was an off-the-shelf tablet, not actually connected to the vehicle’s
systems, the indictment said.
When he was confronted by media reports last year about his
alleged fraud at the 2016 event, Milton took to Twitter and financial outlets
and “doubled down on his prior deceptions,” prosecutors said.
After a series of tweets in which prosecutors said Milton
deceptively lied about the preparedness of the truck in 2016, Milton allegedly
texted a member of Nikola’s board and said, “[s]hare value went up after my
response,” according to the indictment.
In another episode outlined by prosecutors, Milton attended
a commercial shoot for Nikola in which they made the Nikola One truck appear to
be functioning when it in fact was simply rolling down a hill.
That allegation was among those outlined in September by New
York-based short seller Hindenburg Research. Nikola denied the allegations at
the time, but Milton resigned from the company shortly after.
Milton also repeated various other lies about the company’s
products and contractual agreements with partners on his own social media with
the apparent attempt to boost the company’s stock price and thereby his own
fortune, prosecutors alleged.
The indictment said Milton either knew he was overstating
and lying about the company’s operations or that he was negligent to make the
claims he did.
Milton faces two counts of securities fraud and one count of
wire fraud, according to the indictment.
He pleaded not guilty on Thursday and was released on bail
of $100 million that was secured by a pair of unidentified, financially
responsible people, along with two multi-million dollar properties in Utah that
Milton owns.
“Trevor Milton is innocent; this is a new low in the
government’s efforts to criminalize lawful business conduct. Every executive in
America should be horrified,” a spokesperson for Milton’s legal team said.“From
the beginning, this has been an investigation in search of a crime. Justice was
not served by the government’s action today, but it will be when Mr. Milton is
exonerated,” they added.
The Securities and Exchange Commission also filed civil
securities fraud charges against him on Thursday and asked the US District
Court of the Southern District of New York to permanently bar him from acting
as an officer at any publicly traded company.
In a statement, Nikola noted that “today’s government
actions are against Mr. Milton individually, and not against the company.”
Investor interest in Nikola began to grow in 2020 when it
touted its plans for a pickup truck and tractor trailer cab powered by hydrogen
fuel cells.
The company went public in June 2020 through a merger with a
special purpose acquisition company, or SPAC. And in September, General Motors
announced a $2 billion deal acquisition of a stake in Nikola.
At one point last summer, Nikola’s valuation surpassed Ford,
one of the country’s biggest automakers, topping $31 billion before falling
again.
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