Nikola Deathwatch: DOJ Indicts Founder for Lying to Investors
The U.S. Department of Justice has indicted Nikola founder Trevor Milton over claims made to investors that could have been intentionally misleading. Though anybody tracking the story from the beginning already knows the corporate plot surrounding the company’s trucks has more holes than a deli platter comprised entirely of baby swiss.
Back in September, Hindenburg Research (famous for shorting EV startups) released a paper accusing the business of lying to its investors. Nikola’s valuation was an astronomical $31 billion at the time and it swiftly obviously denied any suggestion that it had engaged in fraudulent behavior. But the case being made was pretty difficult to ignore. Nikola’s share price plummeted overnight and Trevor Milton stepped down as CEO.
Those same allegations are coming from the Justice Department. Having been suspended by a grand jury in November of 2020, Nikola’s founder is now facing criminal fraud charges. The U.S. Attorney’s Office in Manhattan has filed two counts of securities fraud and one count of wire fraud. Documents accuse Milton of lying about “nearly all aspects” of the business.
Unfortunately, the company attempted to embrace transparency immediately after the Hindenburg report and hired the Chicago-based Kirkland & Ellis law firm to conduct an internal investigation. At the time, Nikola basically confessed to both the company and its former CEO misleading shareholders. Though it referenced them as inaccuracies or mistakes, it’s not the sort of admission you want to make ahead of federal charges.
“This is a very straightforward case, Milton told lies to generate popular demand for Nikola stock, Beginning at least in or about March 2020, when Nikola announced that its stock would become publicly listed, Milton became increasingly preoccupied with keeping Nikola’s stock price high,” U.S. Attorney Audrey Strauss told reporters during a briefing held on Thursday.
Of course, Milton’s team begs to differ.
“Trevor Milton is innocent; this is a new low in the government’s efforts to criminalize lawful business conduct. Every executive in America should be horrified,” a spokesperson wrote in a statement. “Trevor Milton is an entrepreneur who had a long-term vision of helping the environment by cutting carbon emissions in the trucking industry. Mr. Milton has been wrongfully accused following a faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses. From the beginning, this has been an investigation in search of a crime. Justice was not served by the government’s action today, but it will be when Mr. Milton is exonerated.”
Prosecutors are trying to build a case that Milton intentionally designed a scheme that would launch Nikola’s stock into the stratosphere and used false information to go public via a special purpose acquisition company (SPAC). Your author would argue that SPACs are already pretty sketchy in themselves and make it easy to spike IPOs based on little more than lofty promises. But that’s another issue entirely and one that the Securities and Exchange Commission will undoubtedly be looking into.
Meanwhile, the main aspects of the federal critique against Nikola are all things the company has heard before. Among those include Milton claiming its Nikola One semi-truck prototype was fully operational when it was not. Other alleged fabrications include assertions that the company was already producing its own hydrogen, claims that it was using proprietary hardware to build its Badger electric pickup, and some in-house battery production that turned out to be a third party. But the one that got the SEC so interested in the first place was the promise that Nikola had secured binding vehicle orders that would have ensured billions in revenue. This was the lynchpin that likely made the small-time investors feel comfortable putting their own money on the line.
But it doesn’t appear to have been true in even the most abstracted sense. Nikola obviously wasn’t as far along in development as claimed and there was nothing binding about those orders.
Strauss indicated that Milton had been taken into custody on Thursday morning. Meanwhile, Nikola is trying to distance itself from the man by reiterating that he left the company in September of 2020 and has had no influence on the businesses since then. It issued a release in response to the indictment asserting its independence while attempting to remind the public that the charges being leveled are specifically against Milton and that it had cooperated with the government during the formal inquiry.
Join the conversation
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- MaintenanceCosts Despite my hostile comments above I really can't wait to see a video of one of these at the strip. A production car running mid-eights is just bats. I just hope that at least one owner lets it happen, rather than offloading the car from the trailer straight into a helium-filled bag that goes into a dark secured warehouse until Barrett-Jackson 2056.
- Schurkey Decades later, I'm still peeved that Honda failed to recall and repair the seat belts in my '80 Civic. Well-known issue with the retractors failing to retract.Honda cut a deal with the NHTSA at that time, to put a "lifetime warranty" on FUTURE seat belts, in return for not having to deal with the existing problems.Dirtbags all around. Customers screwed, corporation and Government moves on.
- Bullnuke An acquaintance of mine 50+ years ago who was attending MIT (until General Hershey's folks sent him his "Greetings" letter) converted an Austin Mini from its staid 4 cylinder to an electric motored fuel cell vehicle. It was done as a project during his progression toward a Master Degree in Electrical Engineering. He told me it worked pretty well but wasn't something to use as a daily driver given the technology and availability of suitable components of the time. Fueling LH2 and LOX was somewhat problematic. Upon completion he removed his fuel cell and equipment and, for another project, reinstalled the 4 banger but reassembled it without mechanical fasteners using an experimental epoxy adhesive instead which, he said, worked much better and was a daily driver...for awhile. He went on to be an enlisted Reactor Operator on a submarine for a few years.
- Ajla $100k is walking around money but this is almost certainly the last Dodge V8 vehicle and it's likely to be the most powerful factory-installed and warrantied pushrod engine ever. So there is some historical applicability to things even if you have an otherwise low opinion of the Challenger.And, like I said up thread, if you still hate it will be gone soon anyway.
- Carlson Fan GM completely blew the marketing of the Volt. The commercials were terrible. You'd swear they told the advertising company to come up with an ad that would make sure no one went out and shopped a Volt after seeing it!...........LOL My buddy asked why I bought a car that only goes 40 miles on a charge? That pretty much sums up how confusing and uninformative the advertising was.
He said that he has a very good brain, all the best words, knows tax law better than anyone, was only joking when he admitted to sexually assaulting women... you guys like liars. Send this joker your money too.
"...But the one that got the SEC so interested in the first place was the promise that Nikola had secured binding vehicle orders that would have ensured billions in revenue. This was the lynchpin that likely made the small-time investors feel comfortable putting their own money on the line. But it doesn’t appear to have been true in even the most abstracted sense. Nikola obviously wasn’t as far along in development as claimed and there was nothing binding about those orders." UH OH, this sounds familiar... Steve Burns better be packing his bags for a country that doesn't have an extradition treaty with the U.S. I suspect we will see a similar article in the future, just replace NIKOLA with LORDSTOWN