US Nikola CEO and founder Trevor Melton speaks during the presentation of his new all-electric battery and hydrogen fuel cell truck in partnership with CNH Industrial, at an event in Turin, Italy on December 2, 2019.
Massimo Pinca | Reuters
Founder of electric semitruck maker Nikola Motor He is on trial for fraud related to statements he made about the company’s technology and products, and statements that federal prosecutors claim are exaggerated and misleading.
The US Attorney’s Office in Manhattan alleged that Trevor Melton, who founded Nicola’s company in 2014, lied about “nearly all aspects of the business” during his tenure as the company’s chairman and CEO. These lies were intended to boost sales of the startup’s stock, prosecutors alleged in indictments issued in 2021 and earlier this year. Milton has denied the accusations.
“He lied to deceive innocent investors into buying his company’s stock,” Assistant US Attorney Nicholas Ross said in opening remarks in US District Court in New York on Tuesday. “On the backs of those innocent investors who were captured by his lies, he became a billionaire almost overnight.”
The jury selection trial began on Monday and began on Tuesday. Prosecutors told potential jurors that the proceedings are likely to last about five weeks.
The trial culminates in the astonishing rise and fall of Nicolas under Milton.
The company’s stock price briefly soared to more than $90 per share in June 2020, days after it went public via a merger with a Special Purpose Acquisition Company (SPAC). Rising stock made Nikola – a company that didn’t have revenue yet at the time – even more valuable than… Ford Motor.
But its shares fell sharply after Milton was forced out of the company in September of that year, then Allegations of fraud by short selling Hindenburg Research. The Securities and Exchange Commission and the US Department of Justice opened investigations after Melton’s departure. It was He was charged with three counts of fraud By a grand jury in July 2021. Prosecution Added the fourth count in June.
Nikola shares closed at $5.03 a share on Tuesday.
Milton faces two counts of securities fraud and two counts of electronic fraud, all relating to statements he made about Nicola’s business when he was the company’s chairman and CEO. If convicted, he could face up to 25 years in federal prison.
Milton’s attorney, Mark Mukasey, said Tuesday that Milton sought to convey a vision for the future of trucking, not to mislead investors. Mukasey noted that the defense plans to argue with other Nicholas executives, including the company’s general counsel, who signed Milton’s comments.
Nicholas himself does not face charges in this case. The Securities and Exchange Commission filed civil charges against the company last year, but the case was settled in December after Nicolas agreed to pay a 125 million dollars fine. Milton still owns Nicholas shares, but the company has severed ties with its founder.
Here’s what Milton ships with:
Prosecutors allege that Milton made “false and misleading statements regarding the development of Nikola’s products and technology” as part of a “scheme” designed to induce retail investors to buy Nikola shares. The plaintiffs allege:
- Melton said the company’s first prototype, called the Nikola One, was “fully functional” — but it wasn’t.
- A video clip showing the model truck apparently going on its own was created by rolling the truck – which can’t drive alone – down a hill.
- Separately, Milton claimed that Nikola designed and built an electric pickup truck called the Badger, entirely on its own, after years of work. But prosecutors say Badger’s movie was little more than “sketches and visualizations” at the time of Milton’s initial statements.
- While the company eventually showed off a prototype for Badger, the show truck was actually built by third-party vendors and based on a truck from a large automaker.
- Milton also told investors that Nikola was producing hydrogen gas – needed to recharge its fuel cell trucks – at a reduced cost. that Nikola developed electric car batteries in-house; And that Nikola has binding orders representing “billions in revenue” for its electric trucks. Prosecutors said all these statements were false.
Milton is also accused of making similar misrepresentations to A farm seller bought it in 2020in an effort to get the seller to accept Nikola shares as partial payment for the purchase.
Prosecutors are expected to begin presenting their full case against Milton to a jury on Wednesday.
-Reuters contributed to this report.
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