NEW YORK: Nikola Corp founder and former chief executive Trevor Milton was criminally charged Thursday with defrauding investors by lying about the electric and hydrogen-powered truck maker.
In an indictment, prosecutors in New York charged the 39-year-old billionaire with two counts of securities fraud and one count of wire fraud over his statements about Nikola products and technology from November 2019 to September 2020.
Officials said Milton used social media posts as well as TV and podcast interviews to raise Nikola’s share price, become one of the world’s 100 richest people, and “upgrade” his stature as an entrepreneur. Relied on PR Blitz.
“Milton lied about almost every aspect of the business,” US Attorney Audrey Strauss told a news conference in Manhattan. “Today’s criminal charges against Milton are where the rubber meets the road.”
NS US Securities and Exchange Commission Related civil charges were filed against Milton.
A Milton spokesman did not immediately comment.
Milton was taken into custody Thursday, and was expected to appear in Manhattan federal court later in the day.
Nikola said in a statement that it has cooperated with the government and is focusing on delivering Trey battery-electric trucks this year. The company was not charged.
In afternoon trading, Nikola shares were down $1.17, or 8.2%, at $13.02, having fallen to a low of $12.60.
Beware of short sellers
The charges fall sharply for Milton, who founded Phoenix-based Nikola in 2014 and was its CEO until June 2020, when it went public following a merger with a special-purpose acquisitions company, or SPAC.
He stepped down as Nikola’s executive chairman last September, two weeks after short-seller Hindenburg Research dubbed the company a “fraud” and said it made several misleading statements about its technology.
Prosecutors said Milton’s inappropriate statements included that Nikola built an electric- and hydrogen-powered “Badger” pickup from the “ground up,” home-grown batteries that Milton knew he was buying elsewhere, And there was early success in making the “Nikola One” semi-truck that he knew didn’t work.
Strauss said that the Nikola One was closest to driving when the company’s engineers rolled a prototype down a hill to film it for a commercial.
Prosecutors said that upon deciding to take Nicola public, Milton became busy keeping his stock price high.
The indictment states that on March 2, 2020, the day before Nikola went public, Milton emailed a board member that “we need to make sure we’re getting retail investors on our side. That’s it. The reason why the stock prevents short selling is very important to me.”
according to seconds, Milton targeted general retail investors, whom he called “Robinhood investors”, portraying himself as a “different” type of CEO who would be “transparent” about his company, seeing it as a trailblazer. Featured it.
“Corporate officials can’t say whatever they want on social media regardless of federal securities laws,” SEC enforcement chief Gurbir Grewal told a news conference.
Prosecutors said Milton’s Nikola stake was worth at least $8.5 billion shortly after the announcements about Badger.
Forbes magazine said Thursday that Milton is still worth $1.2 billion.
Tesla Inc. One of Nikola’s rivals in the electric truck arena. The names of both companies are derived from Nikola Tesla, an inventor whose work involved electricity, and Tesla CEO Elon Musk are now among the richest people in the world.
In 2018, Musk and Tesla each agreed to pay $20 million in civil fines to settle SEC charges over Musk tweets.
Accountability
Nicola initially denied Hindenburg’s allegations, but an outside law firm review in February revealed statements from Milton and company that were partially or completely false.
“We commend regulators for their swift action to protect investors and hold Milton accountable for his blatant lies,” Hindenburg founder Nathan Anderson said in a statement.
Hindenburg released its report two days after General Motors Company agreed to supply batteries, chassis architecture, fuel cell systems and a factory for the Badger pickup in exchange for an 11% Nikola stake and $700 million.
The companies reworked that relationship last November, eliminating the equity stake and making plans to build trucks.
Stephen Girsky, a former GM vice president who ran SPAC, which merged with Nikola, replaced Milton as Nikola’s chairman.
US officials have intensified the investigation of SPAC, which is a quicker way than initial public offerings to take private companies public.
Critics say the process runs the risk of conflicts of interest and shoddy due diligence. US prosecutors and the SEC are also investigating electric pickup truck maker Lordstown Motors Corp., which went public at SPAC about the terms of that merger, as well as the company’s statements about vehicle pre-orders.
In an indictment, prosecutors in New York charged the 39-year-old billionaire with two counts of securities fraud and one count of wire fraud over his statements about Nikola products and technology from November 2019 to September 2020.
Officials said Milton used social media posts as well as TV and podcast interviews to raise Nikola’s share price, become one of the world’s 100 richest people, and “upgrade” his stature as an entrepreneur. Relied on PR Blitz.
“Milton lied about almost every aspect of the business,” US Attorney Audrey Strauss told a news conference in Manhattan. “Today’s criminal charges against Milton are where the rubber meets the road.”
NS US Securities and Exchange Commission Related civil charges were filed against Milton.
A Milton spokesman did not immediately comment.
Milton was taken into custody Thursday, and was expected to appear in Manhattan federal court later in the day.
Nikola said in a statement that it has cooperated with the government and is focusing on delivering Trey battery-electric trucks this year. The company was not charged.
In afternoon trading, Nikola shares were down $1.17, or 8.2%, at $13.02, having fallen to a low of $12.60.
Beware of short sellers
The charges fall sharply for Milton, who founded Phoenix-based Nikola in 2014 and was its CEO until June 2020, when it went public following a merger with a special-purpose acquisitions company, or SPAC.
He stepped down as Nikola’s executive chairman last September, two weeks after short-seller Hindenburg Research dubbed the company a “fraud” and said it made several misleading statements about its technology.
Prosecutors said Milton’s inappropriate statements included that Nikola built an electric- and hydrogen-powered “Badger” pickup from the “ground up,” home-grown batteries that Milton knew he was buying elsewhere, And there was early success in making the “Nikola One” semi-truck that he knew didn’t work.
Strauss said that the Nikola One was closest to driving when the company’s engineers rolled a prototype down a hill to film it for a commercial.
Prosecutors said that upon deciding to take Nicola public, Milton became busy keeping his stock price high.
The indictment states that on March 2, 2020, the day before Nikola went public, Milton emailed a board member that “we need to make sure we’re getting retail investors on our side. That’s it. The reason why the stock prevents short selling is very important to me.”
according to seconds, Milton targeted general retail investors, whom he called “Robinhood investors”, portraying himself as a “different” type of CEO who would be “transparent” about his company, seeing it as a trailblazer. Featured it.
“Corporate officials can’t say whatever they want on social media regardless of federal securities laws,” SEC enforcement chief Gurbir Grewal told a news conference.
Prosecutors said Milton’s Nikola stake was worth at least $8.5 billion shortly after the announcements about Badger.
Forbes magazine said Thursday that Milton is still worth $1.2 billion.
Tesla Inc. One of Nikola’s rivals in the electric truck arena. The names of both companies are derived from Nikola Tesla, an inventor whose work involved electricity, and Tesla CEO Elon Musk are now among the richest people in the world.
In 2018, Musk and Tesla each agreed to pay $20 million in civil fines to settle SEC charges over Musk tweets.
Accountability
Nicola initially denied Hindenburg’s allegations, but an outside law firm review in February revealed statements from Milton and company that were partially or completely false.
“We commend regulators for their swift action to protect investors and hold Milton accountable for his blatant lies,” Hindenburg founder Nathan Anderson said in a statement.
Hindenburg released its report two days after General Motors Company agreed to supply batteries, chassis architecture, fuel cell systems and a factory for the Badger pickup in exchange for an 11% Nikola stake and $700 million.
The companies reworked that relationship last November, eliminating the equity stake and making plans to build trucks.
Stephen Girsky, a former GM vice president who ran SPAC, which merged with Nikola, replaced Milton as Nikola’s chairman.
US officials have intensified the investigation of SPAC, which is a quicker way than initial public offerings to take private companies public.
Critics say the process runs the risk of conflicts of interest and shoddy due diligence. US prosecutors and the SEC are also investigating electric pickup truck maker Lordstown Motors Corp., which went public at SPAC about the terms of that merger, as well as the company’s statements about vehicle pre-orders.
.