Former Nikola boss facing fraud charges

Nikola founder and former chief executive Trevor Milton is facing fraud charges from the US Securities and Exchange Commission (SEC). 

The federal agency is accusing Milton of “repeatedly disseminating false and misleading information” about Nikola’s battery electric and hydrogen truck products and technological accomplishments typically by speaking to investors through social media. 

In September last year, Milton stepped down from the electric truck startup following fraud allegations and a damning report by analyst firm and short seller Hindenburg Research which alleged the company was built “on dozens of lies”.

Among allegations in the research report is that a video called “Nikola One in Motion” was staged. The video showed the semi-truck cruising on a road “at a high rate of speed”. The report alleges the truck was towed to the top of a hill on a remote stretch of road and was simply filmed rolling down the hill. 

Milton founded Nikola in 2015 and helped the company raise more than $1 billion in private offerings and go public through a business combination conducted by a special purpose acquisition company (SPAC). 

According to the SEC’s complaint, during that time and after Nikola was publicly traded, Milton acted as the company’s primary spokesperson appearing regularly on national media and communicating directly with investors through social media.  

Milton allegedly encouraged investors to follow him on social media to get “accurate information” about the company “faster than anywhere else.” 

Milton allegedly used his extensive media platform to repeatedly mislead investors about, among other things, Nikola’s technological advancements, products, in-house production capabilities, and commercial achievements.  

The complaint, filed in US District Court for the Southern District of New York, further alleges that Milton ultimately reaped tens of millions of dollars in personal benefits as a result of his misconduct.

“Having chosen to promote Nikola through social media, Milton was obligated under the securities laws to communicate completely, accurately and truthfully,” SEC Division of Enforcement director Gurbir Grewal says. 

“That obligation exists for all public company officials, even those whose companies have only recently entered the public markets through SPAC transactions.”

SEC Fort Worth Regional Office regional director David Peavler says they allege that Milton “repeatedly made claims, mostly through social media, that either misstated or far exceeded what Nikola and its products actually did or could do”.

“Public company officials cannot say whatever they want on social media without regard for the federal securities laws.  The same rules apply, and the SEC will hold those who make materially false and misleading statements accountable regardless of the communication channel they use.” 

Milton’s legal team released a statement denying the accusations. 

“Trevor Milton is innocent; this is a new low in the government’s efforts to criminalise lawful business conduct,” it says. 

It says Milton has been “wrongfully accused following a faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses”. 

Nikola also released a statement saying Milton resigned from the company on September 20 last year and “has not been involved in the company’s operations or communications since that time”.

It says the government actions are against Milton individually and not against the company. 

“The company has cooperated with the government throughout the course of its inquiry. We remain committed to our previously announced milestones and timelines and are focused on delivering Nikola Tre battery-electric trucks later this year from the company’s manufacturing facilities,” the company says. 

Milton was the company’s largest shareholder and held around US$8.5 billion in Nikola stock at the height of the company’s value which at one point was valued at US$31 billion.

Milton has pled not guilty to the criminal charges and was freed on a US$100 million bond secured against two of his properties in Utah.