Trevor Milton, the billionaire founder of controversial EV startup Nikola Motors, has been indicted by a federal grand jury on three counts of fraud, according to documents unsealed on Thursday.
A criminal complaint lodged against Milton by the United States Securities and Exchange Commission (SEC) accuses the former CEO of lying to investors about “nearly all aspects of the business." Charges include two counts of securities fraud, wire fraud, and making false statements.
According to the unsealed docket, prosecutors believe that Milton used his presence as CEO to spread misleading statements about the company. These helped to pump its stock after the company became publicly traded via a SPAC merger. The complaint also states that Milton made false statements about Nikola's technology in a blatant attempt to mislead "retail investors"—individual, non-institutional investors who purchase securities through brokerage firms—via traditional media, social media, and podcast interviews.
This isn't the first time that Milton has been accused of swindling consumers and investors. In September 2020, financial research firm and short-seller Hindenburg accused Nikola and Milton of "intricate fraud." We covered these allegations in-depth, which you can read here.
To be clear, this specific indictment is against Milton, not Nikola as an organization.
The indictment covers much of what was published in Hindenburg's report, including the company's supposed "billions and billions and billions and billions" of dollars of committed vehicle orders. It also cites phony claims of "game-changing" battery technology being developed in-house, the ability for the company to produce hydrogen for its promised fueling stations, and the ill-fated Badger pickup truck project, which influencers like The Diesel Brothers shilled for. The latter was claimed to be built using proprietary components, but instead, it was found that a donor vehicle from another auto manufacturer had been used.
But perhaps the most damning to the company's reputation was the video of its Nikola One electric semi "in action." Hindenburg found the location where the promotional video was filmed and determined that the truck was actually rolling downhill.
The video of the Nikola One has been removed from YouTube, though it's still viewable on the company's Facebook page.
Nikola then refuted these allegations in a long statement that it claims "sets the record straight." However, several days later, Milton stepped down from his role as CEO. Two women then lodged complaints accusing him of sexual abuse before the month's end.
General Motors, who had previously pledged to acquire equity in Nikola, withdrew its plans for a $2 billion investment by November. This, in turn, scrapped plans to collaborate on hydrogen fuel cell development, as well as engineering and manufacturing deals for Nikola's vehicles like the Badger pickup.
Hindenburg later said that it viewed Nikola's response as a "tacit admission of securities fraud," which the SEC apparently agrees with to an extent and has charged Milton accordingly. The former CEO has since reportedly surrendered himself into federal custody and is expected in court later on Thursday.
As part of the grand jury's indictment, Milton was ordered to forfeit any property or securities "traceable to the commission" of the fraud he is accused of. At the height of Nikola's value following its SPAC merger, Milton held approximately $8.5 billion in stock—CNBC believes that as much as $1 billion may be applicable to this forfeiture order.
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