US charges Nikola founder with fraud

CEO and founder of US Nikola Trevor Milton attends a news conference held to presents its new full-electric and hydrogen fuel-cell battery trucks in partnership with US Nikola, at an event in Turin, Italy, December 3, 2019. — Reuters file pic
CEO and founder of US Nikola Trevor Milton attends a news conference held to presents its new full-electric and hydrogen fuel-cell battery trucks in partnership with US Nikola, at an event in Turin, Italy, December 3, 2019. — Reuters file pic

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NEW YORK, July 29 — US prosecutors charged Nikola founder and former executive chairman Trevor Milton with defrauding investors over myriad claims about the company’s electric vehicles, according to an indictment released today.

Prosecutors with the US Attorney’s Office in New York charged Milton with three counts of fraud, according to the 49-page document.

Milton, who resigned from Nikola in September 2020, allegedly claimed that the company had built a “full-functioning” semi-truck prototype when Milton “knew that the prototype was inoperable,” according to the indictment.

Milton made these and other false claims to “induce retail investors to purchase Nikola’s stock,” said the indictment.

When Milton’s statements were shown to be false, shareholders, including some with little prior investing experience, “suffered tens and even hundreds of thousands of dollars in losses, including, in certain cases, the loss of their retirement savings or funds that they had borrowed to invest in Nikola,” said the indictment.

Milton vaulted to prominence in September 2020 when the company announced a partnership with General Motors shortly after going public through a merger with a special-purpose acquisition vehicle (SPAC).

But things quickly fell apart. Two days after the GM deal was announced, Hindenburg Research published a report accusing the startup of “intricate fraud” based on multiple lies by Milton.

Milton left the company later that month and GM terminated the transaction to take a stake in Nikola in late November.

Nikola has said in securities filings it is cooperating with the Justice Department investigation.

Shares of Nikola slumped 7.5 per cent to US$13.13 in pre-market trading. — AFP

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