Just months after Republic Services terminated its contract with Nikola, the zero-emission vehicle maker’s founder Trevor Milton has been charged with two federal counts of securities fraud and one count of fraud. electronic.
The indictment, which was unsealed in Manhattan federal court on July 29, said Milton defrauded investors by providing them with false and misleading statements about the company’s product and technology development based in Manhattan. Phoenix. According to the documents, Milton specifically targeted non-professional or “retail” investors with media coverage of Nikola’s vehicles as well as using social media platforms.
“As alleged, Trevor Milton has brazenly and repeatedly used social media, as well as television, podcast and print media appearances and interviews, to make false and misleading statements about the status of trucks and trucks. technology from Nikola,” Manhattan-based U.S. attorney Audrey Strauss said in a statement. statement, “but today’s criminal charges against Milton are where the rubber meets the road, and he will now be held accountable for his allegedly false and misleading statements to investors.”
The majority of Nikola’s investors had no stock market experience and took to investing as a hobby or to make up for lost income during the pandemic. Some of these investors have lost significant sums, including loss of retirement savings.
Nikola’s initial public offering (IPO) by merger with a special purpose acquisition company, or “SPAC”, was also fraudulent.
Among the false and misleading claims was that the company’s Nikola One prototype was serviceable. Prosecutors say Milton towed the Nikola One truck up a hill and pushed it down to simulate the appearance of a fully functional vehicle.
The company allegedly designed its “Badger” hydrogen-powered pickup truck from scratch, but that too turned out to be wrong. Despite Milton’s claims that Nikola was producing hydrogen at low cost, this was not the case.
Milton also claimed the company manufactures batteries and parts at its own facilities when purchased through third parties.
Additionally, the founder said reservations for future delivery of tractor-trailers were binding orders totaling billions of dollars in revenue, while the “vast majority” of orders could be cancelled.
One of the widely publicized orders came from Republic Services, which placed a minimum order for 2,500 garbage trucks in August 2020. The deal was expandable up to 5,000 total vehicles, according to Nikola. Full production deliveries of the truck were expected to arrive in 2023, with road tests in 2022.
Nikola CEO Mark Russell called the deal a “game changer”, saying: “Garbage truck customers have always ordered chassis from truck OEMs and bodies from other suppliers. Nikola has fully integrated the chassis and body, covering both with a single factory warranty. The trucks will include both automated side loaders and front loaders, all of which will be zero-emissions.”
Just a month later, financial services firm Hindenburg Research trashed Nikola in a report titled “Nikola: How to Turn an Ocean of Lies into a Partnership with America’s Largest Automotive Supplier.”
Republic Services ended the partnership in December 2020. Nikola attributed the cancellation of the order to the “combination of the various new technologies and design concepts would result in longer than expected development time and unexpected costs”.
“It was the right decision for both companies given the resources and investment required,” Russell said in a statement. “We support and respect Republic Services’ commitment to providing sustainable and environmentally friendly solutions to their customers. Nikola remains focused on delivering our battery electric and fuel cell commercial truck programs, as well as the energy infrastructure to support them.
Milton’s legal team released the following statement:
Trevor Milton is innocent; this is a new low in the government’s efforts to criminalize lawful business conduct. Every leader in America should be horrified. Trevor Milton is an entrepreneur who had a long term vision to help the environment by reducing carbon emissions in the trucking industry. Mr. Milton was wrongfully charged following a flawed and incomplete investigation in which the government ignored key evidence and failed to interview important witnesses. From the beginning, it is an investigation in search of a crime. Justice has not been served by government action today, but it will be when Mr. Milton is exonerated.
Milton pleaded not guilty to all charges.