By on July 29, 2021

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.

[Image: Nikola]

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18 Comments on “Nikola Deathwatch: DOJ Indicts Founder for Lying to Investors...”


  • avatar
    SCE to AUX

    Milton’s business shenanigans are one thing, but at the end of the day Nikola still has no product, and no viable technology or business plan.

    The employees must be abandoning ship pretty quickly. I hear restaurants are hiring.

    • 0 avatar
      stuki

      There are no viable products. Nor technology.

      And: Those who can, do. “Plans” are for those who can’t.

      Like this clown. As well as all and everyone like him. Which, in our financialized dystopia, is becoming increasingly everyone whom The Fed has arbitrarily redistributed all resources to. Hence why America as a whole, pretty much no longer can. Not even as much as a communist country, which is pretty darned sad.

      “We” are not 100% Venezuela yet, though. There are still some pockets of world class seedcorn left for the Fed to transfer to FIRE idiots. Covid vaccines which actually work, and can be produced in quantity being the most recent example of the commies coming up short compared to what little remains of the once-was West. But it’s only a matter of time, before the commies do those better than “us” as well. All in order for us to keep negative-value-add rank morons comfortable in the illusion that the mold in their walls, tooth fairies from the “ooooh! Fuuuuture!!”, and Cramer screaming nonsense about random series of numbers, somehow create value while they sit there being their customary useless selves.

  • avatar
    Lorenzo

    Way back in the old days, the death watches were for staid old companies that have fallen on hard times and require a minor miracle or two (or federal cash) to avoid bankruptcy. I’m thinking GM, Hostess, J.C. Penney.

    Now we have death watches for companies that were never alive in the first place, basically never-were’s and never-will-be’s. With companies like this, with the strong odor of fraud, is it even worth the trouble to start a death watch?

    Maybe another label is needed. How about pipe dreams?

  • avatar
    probert

    Buy the dip?

    • 0 avatar
      Lorenzo

      You can’t go wrong with guacamole.

      This stock? If your intent is to double your money, the best advice is fold the bills in half and put them in your pocket.

  • avatar
    Cicero

    Hmm. On one side you have an ex-CEO with a shady past who drove the value of his company into the stratosphere with a slew of representation that were so disconnected from reality that uttering them would violate the code of ethics in the carnival barker business.

    On the other side you have an array of hyper-politicized federal agencies with established track records of lying, cooking the evidence and running entrapment schemes against their hapless victims.

    It’s really hard to know who to root for in this one.

    • 0 avatar
      Crosley

      Agreed.

      The scales have fallen from my eyes. If I was a jury member, I’d knee jerk want to acquit any case brought by a federal agency and Southern District New York as its now usually political like some 3rd world country.

  • avatar
    Socrates77

    I can’t believe wall street keeps doing this kinda stuff. Lying narcissists keep making millions of dollars. Including this hedge funds and corporations. GM should be investigated on this, they knew nikola and lordstown motors were nothing but shell companies that were used to steal from dumb investors. Haha it didn’t work mary barra so keep losing money and shrinking. your poor quality automotive crap you’re making is coming to and end. Overpaid CEO.

  • avatar
    ToolGuy

    “Every executive in America should be horrified”

    It’s a good year for that sort of thing.

  • avatar
    Crosley

    There are so many frauds like this going on right now in the stock market. In the OTC space, you have joke penny stock companies with billion dollar valuations.

    I blame stimmie checks, stay at home policies, ultra low interest, crypto and free trading platforms for creating a new pastime for gamblers. It’s going to be an ugly thing when it all pops, like subprime housing when bartenders had a multi million portfolio of rental properties.

    • 0 avatar
      28-Cars-Later

      Let me know if you get a line on when so I can buy puts.

      • 0 avatar
        Crosley

        Unfortunately, its very hard to buy options like puts in the OTC “penny stock” space, and usually you have to pay crazy rates as there’s not enough shares to borrow for a short.

        Also, as stupid as something may be, it can stay stupid for a long time. Nikola the company still has a market cap of close to $5 billion.

        But search for stories like a single deli in New Jersey that is publicly traded and had a $100 million value as an example of how insane its all gotten.

        https://www.cnbc.com/2021/04/15/theres-a-single-new-jersey-deli-doing-35000-in-sales-valued-at-100-million-in-the-stock-market.html

  • avatar
    Ol Shel

    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.

  • avatar
    wolfwagen

    “…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

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