Nikola USA CEO and founder Trevor Milton speaks during the unveiling of an all-new electric and hydrogen fuel cell truck in partnership with CNH Industrial, at an event in Turin, Italy December 2 2019.
Massimo Pinca | Reuters
Founder of electric semitruck maker Nikola Motor is standing trial on fraud charges related to claims he made about the company’s technology and products, claims that federal prosecutors allege are exaggerated and misleading.
The United States Attorney’s Office in Manhattan alleges that Trevor Milton, who founded Nikola in 2014, lied about “nearly all aspects of the business” during his time as chairman and director. company’s executive. Those lies were intended to boost the startup’s stock sales, prosecutors allege in indictments published in 2021 and earlier this year. Milton has denied the allegations.
“He lied to trick innocent investors into buying his company’s stock,” Assistant U.S. Attorney Nicolas Roos said in his opening statement in U.S. District Court in New York on Tuesday. . “Behind innocent investors deceived by his lies, he became a billionaire almost overnight.”
The trial begins with the jury’s choice on Monday and begins on Tuesday. Prosecutors told prospective jurors that the proceedings are likely to last about five weeks.
The test shows Nikola’s incredible rise and fall under Milton.
The company’s stock price briefly rose to over $90 per share in June 2020, a few days after listing shares through a merger with a special purpose acquisition company. (SPAC). The increase in the stock price made Nikola – a company with no revenue at the time – more valuable Ford Motor.
But its shares plummeted after Milton was forced out of the company in September of that year, after Fraud allegation made by short seller Hindenburg Research. Both the Securities and Exchange Commission and the US Department of Justice opened investigations following Milton’s departure; he was indicted on three counts of fraud by a grand jury in July 2021. Prosecutors added the fourth number in June.
Nikola shares closed at $5.03 per person on Tuesday.
Milton is facing two counts of securities fraud and two counts of electronic fraud, all related to statements he made about Nikola’s business while he was chairman and director. company’s executive. If convicted, he could face up to 25 years in federal prison.
Milton’s attorney, Marc Mukasey, said on Tuesday that Milton sought to communicate his vision for the future of the trucking industry, not to mislead investors. Mukasey pointed out that the defense plans to argue with other executives at Nikola, including the company’s general counsel, who signed off on Milton’s statements.
Nikola himself does not face charges in this case. The SEC brought related civil charges against the company last year, but that case was settled in December after Nikola agreed to pay $125 million in fines. Milton still owns Nikola stock, but the company has severed ties with its founder.
Here’s what Milton is accused of:
Prosecutors allege that Milton made “false and misleading statements regarding Nikola’s product and technology development” as part of a “plan” to entice investors Retailers buy shares of Nikola. Prosecutors allege:
- Milton says that the company’s first semicircular prototype, called the Nikola One, is “fully functional” – but it’s not.
- A video showing the prototype truck seemingly self-driving with its energy was generated by rolling the truck – which cannot drive itself – down a hill.
- Separately, Milton claims Nikola designed and built an electric pickup truck called the Badger, after years of work. However, prosecutors said, Badger was more than “a concept sketch and rendering” at the time Milton originally claimed it.
- Although the company eventually showed off a prototype Badger, the show truck was in fact built by third-party suppliers and was based on a truck from an automaker. great.
- Milton also told investors that Nikola is producing hydrogen gas – needed to fuel fuel cell trucks – at a reduced cost; Nikola has developed in-house electric vehicle batteries; and Nikola already have binding orders representing “billions of sales” for its electric trucks. All of those claims were untrue, according to prosecutors.
Milton is also accused of making similar misrepresentations to the seller of a farm he bought in 2020in an attempt to get the seller to accept Nikola stock as part of payment for the purchase.
Prosecutors are expected to begin presenting their entire case against Milton to jurors on Wednesday.
—The calculator contributed to this report.
