U.S. accuses Trevor Milton, founder of Nicolas, of lying to investors Reuters

© Reuters. File picture: On December 3, 2019, at an event held in Turin, Italy, the CEO and founder of US Nikola Trevor Milton attended the meeting with US Nikola Trevor Milton. (US Nikola) The press conference of the new all-electric and hydrogen fuel cell truck jointly launched.Reuters/Massimo

Authors: Jonathan Stempel and Ben Klayman

New York (Reuters)-Billionaire founder and former CEO of Nikola Company Trevor Milton was criminally charged on Thursday for investing in the electric and hydrogen-powered truck manufacturer. The author lied and deceived investors.

The 39-year-old Milton committed two crimes of securities fraud and one wire transfer for his statements regarding Nikola’s products and technology during a hearing in Manhattan Federal Court between November 2019 and September 2020. Pleaded not guilty to fraud.

Authorities said Milton relied on social media posts and public relations blitzs from TV and podcast interviews to push up Nicholas’s stock price, becoming one of the 100 richest people in the world, and “upgrading” his status as an entrepreneur.

“Milton lied about almost every aspect of the business,” U.S. Attorney Audrey Strauss in Manhattan said at a news conference. “The criminal charges against Milton today are where rubber meets the road.”

Milton’s bail is set at $100 million, partly guaranteed by two homes owned by residents of Oakley, Utah.

The maximum sentence for each crime is 20 or 25 years. The US Securities and Exchange Commission filed a related civil lawsuit.

“Trevor is innocent,” Milton’s lawyer Mark Mukashi said in an email. “There is no fraud. We are ready to fight this case in trial.”

Nikolai was not charged. It said in a statement that it worked with the government to focus on delivering Tre battery electric trucks this year.

In the afternoon trading, Nicholas’ stock price fell by $1.28, or 9%, to $12.91 after falling to $12.60.

Be wary of short sellers

These allegations marked the downfall of Milton, who founded Phoenix-based Nicolas in 2014 and served as its chief executive until June 2020, when the company merged with a special purpose acquisition company or SPAC Listed.

Milton resigned as executive chairman of Nicolas in September last year. Two weeks ago, the short-seller Hindenburg Research Company marked the company as “fraud” and stated that the company made many misleading statements about its technology.

The prosecutor said that Milton’s improper statements included that Nicolas manufactured an electric and hydrogen-powered “badger” pickup truck from “scratch”, internally developed a battery he knew was purchased elsewhere, and successfully manufactured it at an early stage. “Nicholas”. He knew that a” semi-truck would not work.

Strauss said that the closest thing to driving the Nikola One is the company’s engineers pushing the prototype down the hill in order to shoot the commercials.

The indictment stated that Milton also focused on keeping Nicolas’ stock price high.

It stated that on March 2, 2020, the day before Nikola revealed that it would go public, Milton sent an email to a board member stating that “() needs to make sure that we let retail investors stand on our side. This It’s what prevents stocks from selling short.” This is very important to me. “

The US Securities and Exchange Commission stated that Milton’s goal is ordinary investors, which he calls “Robinhood (NASDAQ:) investors”, and portrays himself as a “different” type of CEO, which is very important for his pioneering company. Straightforward.

“Company officials cannot say anything they want to say on social media without considering the federal securities laws,” Gubir Greval, the head of enforcement at the US Securities and Exchange Commission, said at a news conference.

Prosecutors said that shortly after the news about the badger was announced, Milton’s Nikolai shares were worth at least $8.5 billion.

“Forbes” magazine said on Thursday that even though Nicolas’s share price has fallen by more than 85% from its June 2020 peak, Milton is still worth $1.2 billion.

Tesla (NASDAQ:) Inc is one of Nikola’s competitors in the field of electric trucks.

The names of both companies are derived from Nikola Tesla, an inventor who worked on electricity, and Tesla CEO Elon Musk is now one of the richest people in the world.

In 2018, Musk and Tesla each agreed to pay a civil fine of $20 million to resolve the SEC’s allegations against Musk’s tweets.

Accountability

Nikola initially denied Hindenberg’s allegations, but said in February that an external law firm’s review found that Milton and the company’s statements were partially or completely wrong.

Hindenburg founder Nathan Anderson (Nathan Anderson) said in a statement: “We applaud the expedient measures taken by regulators to protect investors and hold Milton accountable for his shocking lies.”

Two days after General Motors (NYSE:) agreed to supply batteries, chassis architecture, fuel cell systems, and a factory for Badger pickup trucks in exchange for an 11% stake in Nikola and $700 million, Hindenburg released its report.

The two companies re-established this relationship in November last year, cancelled the equity and planned to build trucks.

Former General Motors Vice Chairman Stephen Gilsky was responsible for managing the SPAC that merged with Nikola, replacing Milton as the chairman of Nikola.

Compared with IPOs, SPACs are a faster way to get private companies to go public.

But critics said that this process is prone to conflicts of interest and crude due diligence, and the US authorities have stepped up their scrutiny of SPACs.

Prosecutors and the SEC are also investigating Lordstown Motors Corp, a manufacturer of electric pickup trucks that went public in October last year, regarding the terms of its SPAC and its statement regarding vehicle reservations.



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