Billionaire Trevor Milton – who founded electric truck film Nikola – is charged with fraud

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The billionaire founder of electric truck firm Nikola has been charged with three counts of fraud for allegedly lying to investors about ‘nearly all aspects of the business.’ 

Trevor Milton, 39, was indicted on two counts of securities fraud, including making false statements about the company, and wire fraud, the US Department of Justice announced Thursday. 

Milton voluntarily surrendered to authorities Thursday and has been taken into federal custody. He is expected to make his first appearance in court in New York later today. 

Federal prosecutors said that, from November 2019 to September 2020, the businessman schemed to defraud investors into buying Nikola shares through misleading statements about the company’s products, technology and future sales potential. 

Under the indictment, the billionaire is ordered to forfeit all property ‘traceable to the commission of said offenses,’ which will likely include more than $1 billion he pocketed went he took Nikola public last June. 

The charges come after the Justice Department and the Securities and Exchange Commission launched an investigation into the business back in September – just days after General Motors (GM) announced a lucrative $2 billion partnership with the start-up.

The grand jury indictment, unsealed Thursday and brought by the US Attorney’s Office in Manhattan, said Milton ‘targeted individual, non-professional investors — so-called retail investors — by making false and misleading statements directly to the investing public through social media, and television, print and podcast interviews.’  

Prosecutors said Milton misled investors in order to drive up Nikola’s stock price, enrich himself and ‘elevate his stature as an entrepreneur.’ 

Shares in Nikola plummeted more than 9 percent to below $13 a share before Thursday’s opening bell as news of the charges broke. 

Spokespeople for Milton had no immediate comment. 

Nikola said in a statement it has cooperated with the government, and is focused on delivering Tre battery-electric trucks this year. The company has not been charged.  

Nikola said it is aiming to roll out its first battery-electric trucks later this year. 

Back in February, the company disclosed, following a review by an outside law firm, that both it and Milton had made several statements that were partially or completely inaccurate. 

Milton founded Nikola in Phoenix in 2015 to develop green energy trucks and pick-ups powered by electric batteries or hydrogen fuel cells.

The company soared in value, signing strategic partnerships with the likes of GM and German engineering giant Bosch – despite the company being yet to make a single vehicle.

Milton took the firm public last June, earning him more than $1 billion and making him a billionaire overnight. 

In September, GM announced it would be investing $2billion in the company and providing it with hydrogen fuel cells and batteries for its vehicles in exchange for an 11 per cent stake in the firm.  

But the company and Milton’s reputation then started to unravel when short-seller Hindenburg Research published a bombshell report just two days after the GM deal was announced, claiming Milton lied about the company’s technology.

The damning report claimed the electric truck start-up was based on years of lies, exaggerations of its technologies and faked product launches.

The short-seller accused Milton of ‘misleading partners into signing agreements by falsely claiming to have extensive proprietary technology’.

It also claimed Nikola was short-selling stock and labelled the company a ‘fraud’, a charge it denied. 

Hindenburg claimed to have ‘extensive evidence’ that Nikola’s proprietary technology was purchased from another company.

Hindenburg also alleged that Milton appointed his brother, Travis, to lead a unit in the company for which he did not have any substantial experience related to the sector.   

The company was also accused of faking a promotional video for its truck, the Nikola One, in 2018.  

The video, titled ‘Nikola One in Motion’, appeared to show the truck driving on a level road at a high rate of speed.

But, according to Hindenburg, the truck didn’t have a working engine.

Instead, the company rolled the prototype along a downhill stretch of a highway and filmed it as if it was being driven along a flat road.  

Milton hit back at the allegations at the time, slamming the report a ‘hit job’ and ‘lies’.

‘It makes sense. Tens of millions of shares shorted the last day or two to slam our stock and a hit job by Hindenburg. I guess everything is fair game in war, even a hit job. I know who funded it,’ he tweeted.

He also claimed the the company had been ‘vetted by some of the world’s most credible companies and investors’ and claimed the report was an attempt to ‘manipulate’ stock.

But the allegations sent shares plummeting and sparked an investigation by the Securities and Exchange Commission and the Justice Department into the company. 

Milton stood down as executive chairman from the truck start-up company he founded days later on September 21 amid the allegations.   

The billionaire claimed at the time he was voluntarily stepping aside so that the focus would be on the company and ‘its world-changing mission’ and insisted there was no truth to the allegations.

‘I intend to defend myself against false allegations leveled against me by outside detractors,’ he said.  

He was replaced by Stephen Girsky, a Nikola board member and former vice-chairman at GM. 

At the time, Milton was estimated to have a net worth of at least $3.2 billion.  

Six years after the company was founded, it is yet to release any electric trucks to market.