Nikola founder Trevor Milton indicted with securities fraud

Trevor Milton, the founder and former CEO of electric truck maker Nikola Corp, has been indicted on three counts of criminal fraud by prosecutors for allegedly lying about “nearly all aspects of the business,” the U.S. Justice Department said on Thursday.

The indictment said Milton built an intricate scheme to deceive investors into buying Nikola shares to pump it up for ten months from November 2019 through false statements about the company’s product and technological development.

“Milton’s scheme targeted individual, non-professional investors — so-called retail investors — by making false and misleading statements directly to the investing public through social media, and television, print and podcast interviews,” prosecutors said in the 49-page indictment.

One such misleading statement was about Nikola One, a long-distance truck prototype, which did not work, contrary to Milton’s glowing words.

Federal prosecutors accused him of using Nikola’s deal to go public via a $700 million SPAC merger with VectorIQ to target retail investors, some of whom lost hundreds of thousands of dollars.

Shares of Nikola dropped more than 11% on Thursday to $12.60 a share, after falling from more than $65 in the middle of last year.

Last year, Milton tweeted that he intended to defend himself against “false allegations” and resigned with two counts of securities fraud, including making false statements and wire fraud after Hindenburg Research said that it was short-selling the shares of Nikola and labeled the company a “fraud.”

In February, the EV startup said both the company and Milton had made several partially or entirely inaccurate statements from 2016 through the company’s IPO last year, following a review by an outside law firm.

However, the prosecutors did not charge Nikola. The company said Milton had no involvement in the company’s operations or communications since his resignation.

“Nikola has cooperated with the government throughout the course of its inquiry,” the company’s statement said. “We remain committed to our previously announced milestones and timelines and are focused on delivering Nikola Tre battery-electric trucks later this year from the company’s manufacturing facilities.”

U.S. Attorney’s office said Milton surrendered to the authorities and is expected to be presented in court later today in New York.

Milton was Nikola’s largest shareholder and held around $8.5 billion in stock at the height of the company’s valuation.

Prosecutors said Milton shall forfeit all property “traceable to the commission of said offenses,” which would likely include the more than $1 billion he earned when Nikola went public in June 2020, as he “was motivated to engage in the fraudulent scheme in order to enrich himself and elevate his stature as an entrepreneur.”

Short-selling firm Hindenburg Research first uncovered the allegations regarding false and misleading statements.

In September, Hindenburg published a report titled “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America,” two days after the company announced a deal with General Motors that sent both companies’ shares soaring.

Picture Credit: NBC News