Nikola Corp. founder and former chairman Trevor Milton has been charged by prosecutors with making false statements to investors in the electric-vehicle startup. The charges follow a difficult year for the company, which went public last year and almost immediately faced questions about its production and technology.
Milton, 39, who stepped down from the company last year, is charged with misleading investors from November 2019 until around September 2020, according to a criminal indictment unsealed Thursday by federal prosecutors in N.Y. He voluntarily surrendered to federal custody and was freed by a judge on $100 million bail after pleading not guilty. The bail was secured by a 2,700-acre ranch in Utah owned by Milton, who promised to limit his travel and not to contact investors.
“In order to drive investor demand for Nikola stock, Milton lied about nearly every aspect of the business,” Acting U.S. Attorney for the Southern District of New York Aubrey Strauss said in a press conference.
In a separate complaint filed Thursday, the Securities and Exchange Commission said, “Milton sold a version of Nikola not as it was — an early-stage company with a novel idea to commercialize yet-to-be proven products and technology — but rather as a trail-blazing company that had already achieved many groundbreaking and game-changing milestones.”
“Trevor Milton is innocent,” his lawyers said in a statement. “This is a new low in the government’s efforts to criminalize lawful business conduct. Every executive in America should be horrified.”
That Milton would plead not guilty despite his company already publishing its own investigation and findings of misstatements is not a surprise. Over the course of 2020, Milton spoke freely about the company’s share price, and his predictions for the startup over the course of 2020 helped put SPACs back on the map.
Social-media use was a mainstay of Milton’s tenure. After a short seller’s report in September, he issued a long series of Instagram posts berating the author and other critics of the company. He appealed to investors in an Instagram video to exercise warrants. Milton was often combative on Twitter with those who questioned his statements and the company’s potential, before deleting his social media accounts on Sept. 23
Nikola said in a statement that it has cooperated with the investigation. “Today’s government actions are against Mr. Milton individually, and not against the company,” it said.
Shares of the electric vehicle startup fell as much as 11% on Thursday, the biggest intraday drop since March 5, and touching the lowest level since May 26. The stock was down 10.8% to $12.65 as of 3:10 p.m. in New York.
Nikola’s sudden rise and dramatic fall kicked off a trend. Other startups including Lordstown Motors Corp. and Canoo Inc. have gone down similar paths, merging with special purpose acquisition companies and then struggling to hold up to scrutiny after going public.