A federal grand jury indicted Nikola founder Trevor Milton on three counts of criminal fraud for lying about “almost every aspect of the business” to boost stock sales in the electric vehicle start-up, according to an indictment revealed on Monday. Thursday.
The United States Attorney’s Office in Manhattan charged the 39-year-old billionaire, who resigned as president in September, with two counts of securities fraud, including making false statements about the company and wire fraud.
The Securities and Exchange Commission also filed civil securities fraud charges against Milton on Thursday. The SEC petitioned the US District Court for the Southern District of New York to permanently bar him from acting as an officer in a company that issues securities, returning all ill-gotten gains and paying a fine.
“This is a very simple case, Milton told lies to generate a popular demand for Nikola shares. Beginning at least in March 2020 or around that date, when Nikola announced that his shares would go public, Milton became increasingly concerned about keeping Nikola’s share price high. ” “US Attorney Audrey Strauss told reporters at a news conference Thursday.
Prosecutors said Milton built an intricate scheme designed to increase the company’s stock for his own benefit by lying about the company’s products, technology and future sales prospects. They accuse him of using Nikola’s deal to go public through a special-purpose acquisition company to target hobbyist retail investors, some of whom lost hundreds of thousands of dollars.
“The Milton scheme targeted non-professional individual investors, so-called retail investors, by making false and misleading statements directly to the investing public through social media and interviews on television, print media and podcasts,” according to the indictment of 49 pages.
Nikola’s shares fell as much as 11% during early trading on Thursday. The stock was trading at $ 12.85 per share, down 7.4% mid-morning.
Strauss said Milton was taken into custody earlier that day in Manhattan and will appear in court later in the afternoon. A spokesman for Milton did not immediately comment on the allegation.
Milton, who was the largest shareholder in the company, had roughly $ 8.5 billion worth of Nikola stock at the height of the company’s value. At one point last summer, Nikola’s valuation topped Ford Motor, topping $ 31 billion.
The grand jury said Milton should lose all property “attributable to the commission of such crimes,” which would likely include the more than $ 1 billion he made when Nikola went public in June 2020.
Prosecutors said Milton “was motivated to participate in the fraudulent scheme to enrich himself and raise his stature as a businessman.”
Nikola said in an emailed statement that he has “cooperated with the government during the course of its investigation.” The company emphasized that the allegations are against Milton and not Nikola.
“We remain committed to our previously announced milestones and schedules and are focused on delivering Nikola Tre battery electric trucks later this year from the company’s manufacturing facilities,” the company said.
Many of the allegations of false and misleading statements were discovered by Hindenburg Research, a short seller.
In a September report, Hindenburg accused Milton of making false statements about Nikola’s technology to grow the company and partner with auto companies. The report, titled “Nikola: How to Harness an Ocean of Lies in a Partnership with America’s Largest Auto Manufacturer,” was released two days after the company announced a deal with General Motors that caused the shares of both companies will skyrocket. The short seller characterized Nikola as an “intricate fraud built on dozens of lies” by Milton.
Following an internal investigation, Nikola said in February that it discovered that Milton made several inaccurate statements since 2016 through the company’s IPO that misled investors.
