Trevor Milton, the founder and former chairman of car-maker Nikola Motor, has been charged by U.S. prosecutors and the Securities and Exchange Commission with fraud stemming from comments he made in a nearly yearlong scheme to allegedly deceive retail investors about the high-flying business before and after its buzzy trading debut last June.
In an indictment unsealed Thursday, the U.S. Attorney’s Office in Manhattan charged Milton, 39, with three counts of fraud, alleging the former Nikola CEO made deceptive and false statements about the company between November 2019 and September 2020 to defraud investors into buying shares.
In a separate complaint filed Thursday, the SEC charged Milton with securities fraud for repeatedly (and during the same time period) making false and misleading statements about core aspects of Nikola’s business, including falsely claiming the company had obtained “billions and billions and billions and billions” of dollars in committed truck orders on a podcast released last July.
Instead, the agency says the company in regulatory filings claimed to have “only one customer whose order for 800 [trucks] could be characterized as binding” at the time.
In a statement, Phoenix-based Nikola, which has not been charged with wrongdoing, noted Milton has not been involved in company “operations or communications” since he resigned in September and said it has cooperated with the government throughout its inquiry.
Nikola shares plunged 10% to $12.83 in early Thursday trading, pushing its losses this year to nearly 20%.
Representatives for Milton did not immediately respond to Forbes‘ request for comment.
“Before Nikola had produced a single commercial product or had any revenues from truck or fuel sales, Milton embarked on a relentless public relations blitz aimed at a class of investors he called ‘Robinhood investors,'” the SEC wrote in its complaint. “From approximately November 2019 to September 2020, Milton’s statements in tweets and media appearances, individually and taken together, painted a picture of Nikola that diverged widely from its then-current reality.”
$1.3 billion. That’s how much Milton was worth as of Wednesday’s market close, according to Forbes. Milton founded Nikola in 2014 to build semi trucks powered by batteries and hydrogen.
Though it initially skyrocketed after its Nasdaq trading debut, Nikola shares have struggled ever since short-seller Hindenburg, which says it holds no position in the firm, published a report last September calling the electric-vehicle company an “intricate fraud” and alleging then-chairman Milton misled investors about the company’s business. The Justice Department and SEC started their investigations into the firm just days later. Milton has since resigned, legacy carmaker GM pulled out of a massive partnership with the firm late last year and Nikola shares have plunged nearly 75% from a September high.