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The case against Nikola’s Trevor Milton: ‘Lied about nearly every aspect’

Nikola's statement says government actions are against Milton, not the company

(Trevor Milton photo from Nikola)

As U.S. Attorney Audrey Strauss began citing the numerous lies alleged against Nikola founder Trevor Milton during a Thursday news conference to discuss the grand jury indictment, she utilized an apt phrase given his former company’s position as a green-vehicle maker.

“Today’s criminal charges against Milton,” she said, “are where the rubber meets the road.”

That road, at least for Milton, will prove extremely difficult to navigate if federal prosecutors succeed in proving their case, one in which they claim he “lied about nearly every aspect of the business” in order to drive investor demand for Nikola stock.


The first big legal step was taken Thursday morning when Milton was charged with three counts of fraud by the U.S. Attorney’s Office in Manhattan in connection with the investigation into the electric vehicle startup. The charges involved two counts of securities fraud and one count of wire fraud.

Milton was taken into custody in the morning, then appeared in front of Magistrate Judge Sarah Netburn in the Southern District of New York on Thursday afternoon. He pleaded not guilty to all three charges and was freed on a $100 million bond.

His attorneys also released a statement that read, in part: “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.”

According to Bloomberg, the bail was secured by two properties in Utah owned by Milton — one worth $36 million, the other worth $4 million. 

WATCH: ‘A bad, bad day for Trevor Milton’

In addition to the criminal charges, civil charges were filed by the Securities and Exchange Commission for “repeatedly disseminating false and misleading information typically by speaking directly to investors by social media about Nikola’s products and technological services,” according to Gurbir Grewal, the SEC’s director of the Division of Enforcement.

Nikola was quick to distance itself from Milton, issuing a statement that read, “Trevor Milton resigned from Nikola on September 20, 2020, and has not been involved in the company’s operations or communications since that time. Today’s government actions are against Mr. Milton individually and not against the company.  

“Nikola has cooperated with the government throughout the course of its inquiry. We remain committed to our previously announced milestones and timelines and are focused on delivering Nikola Tre battery-electric trucks later this year from the company’s manufacturing facilities.”

Even so, the news was immediately felt on Wall Street, as Nikola’s (NASDAQ: NKLA) share price dropped 10% in the first 40 minutes of trading Thursday. At the closing bell, the stock had fallen to 12.03 a share, down 15% from the previous day.

Meanwhile, the SEC investigation is still ongoing and Nikola could get fined for its days under Milton.

About the misleading Nikola One commercial …

As part of the 49-page indictment, federal prosecutors cited a commercial for the Nikola One semi-truck that misled potential investors — a development first reported in the scathing Hindenburg Research report. Here’s an edited portion of the indictment:

Following the 2016 unveiling of the Nikola One, Milton determined not to complete the prototype, and no further substantial engineering was undertaken. The truck was never completed and has never been operable. 

In or about 2017, a representative of a large multinational corporation approached Nikola and asked to use the Nikola One in a commercial celebrating innovation. The concept for the video included a shot of the Nikola One coming to a stop in front of a stop sign. 

In order to accomplish this feat with a vehicle that could not drive, the Nikola One was towed to the top of hill, at which point the “driver” released the brakes, and the truck rolled down the hill until being brought to a stop in front of the stop sign. For additional takes, the truck was towed to the top of the hill and rolled down the hill twice more. 

Additionally, the Nikola One’s door, which had been constructed using minivan parts, had to be taped up during the shoot to prevent it from falling off. Moreover, because the Nikola One had not been tested and was not safe (and indeed could not operate), certain precautions were taken before towing the vehicle to the commercial shoot. In particular, the turbine, which was designed to run on natural gas, and batteries were entirely removed from the vehicle to mitigate risk of fire, explosion, or damage.

While many events pertaining to Milton unfolded Thursday, prosecutors said their case against him was quite simple — that he spewed a seemingly never-ending series of lies about his company in order to enhance the value of Nikola’s stock and increase his own personal value.

Philip Bartlett, inspector-in-charge at the U.S. Postal Inspection Service, said that in his 33-year career, he had come to “learn there are three characteristics of fraudsters — they’re liars, they’re frauds and they’re cheats.”

“In this case, a fraud was committed with the defendant allegedly misleading the progress and viability of certain hydrogen and battery-powered trucks. … He lied to investors and lured them into believing the company had already developed viable prototypes that were ready to be produced.

“Thousands of investors relied on this false information to purchase company stock. During the days following Milton’s resignation from Nikola, the company lost approximately 40% of its value and individual investors were cheated out of hundreds of thousands of dollars.”

Added Grewal, “This case is about the obligation of corporate officers like Milton to provide complete truthful and accurate information at all times while discussing their company’s affairs. There is no end-around or exception to this obligation. This case also demonstrated that corporate officers cannot say whatever they want on social media without regard for the federal securities laws.”

In summing up the indictment, Strauss said, “At the bottom, this is a very straightforward case. Milton told lies to generate popular demand for Nikola’s stock.”

Yet, Milton’s legal team will argue just the opposite.

“Trevor Milton is an entrepreneur who had a long-term vision of helping the environment by cutting carbon emissions in the trucking industry,” his attorney’s statement read. “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.”

The indictment focused on the time frame between November 2019 to September 2020 and said that Milton schemed to defraud investors into buying Nikola shares through statements about the company’s product and technology development.

WATCH: Prosecutors discuss charges vs. Milton …

Among the “false and misleading statements” cited in the indictment:

  • The company had early success in creating a “fully functioning” semi-truck prototype known as the Nikola One, although Milton knew that the prototype was inoperable.
  • Nikola had engineered and built an electric- and hydrogen-powered pickup truck known as the Badger from the “ground up” using Nikola’s parts and technology, but Milton knew that was not true.
  • Nikola was producing hydrogen and was doing so at a reduced cost, when Milton knew that in fact no hydrogen was being produced at all by Nikola, at any cost.
  • Nikola had developed batteries and other important components in-house, when Milton knew that Nikola was acquiring those parts from third parties.
  • Reservations made for the future delivery of Nikola’s semi-trucks were binding orders representing billions in revenue, but the vast majority of those orders could be canceled at any time and were for a truck Nikola had no intent to produce in the near term.

Milton resigned as Nikola’s executive chairman and gave up his board seat Sept. 20, 2020. Ten days earlier, short seller Hindenburg Research published a scathing 67-page report accusing Milton of fraud and deception by overstating technology claims before the company went public.

The report, titled “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America,” cited numerous false assertions about Nikola’s technology, including producing a video in which a truck was rolled down an incline in order to create the appearance of a working prototype.

Did Milton exploit a SPAC loophole?

Thursday’s indictment not only outlined its case against Trevor Milton, it also put a spotlight on the process of private companies becoming public through deals with special purpose acquisition companies. Here are excerpts from the indictment that outline potential problems:

In order to create fairness in the market and protect retail investors, federal securities laws impose what is commonly referred to as a “quiet period” in connection with IPOs. … Unlike an IPO, a SPAC transaction is not subject to a quiet period. … Its executives are not limited in their ability to speak publicly about the business of the company.

The SPAC through which Nikola went public was VectoIQ Acquisition Corporation.. During the course of negotiations … VectoIQ and its principal shareholders … had access to detailed, non-public information on which to conduct diligence.

On March 3, 2020, Nikola announced that its stock would become publicly traded. … That same day, Nikola announced that it had obtained an additional $525 million in funding through a private investment in public equity (“PIPE”).  Like the VectoIQ shareholders, the PIPE investors had the ability to review Nikola’s books and records, tour Nikola’s facilities, and ask questions of Nikola’s engineers and management.

As a result of the scheme to defraud undertaken by Milton, many retail investors purchased Nikola stock based, at least in part, on false and misleading information promoted publicly by Milton. By contrast, early strategic investors, VectoIQ shareholders, and PIPE investors … had access to more complete and accurate information during their prior due diligence periods. Those investors were able to sell their Nikola stock for a profit at a time when retail and other investors were purchasing stock based, at least in part, on the false and misleading information provided by Milton.

The Hindenburg accusations on Sept. 10 came two days after Nikola announced a manufacturing partnership and supply deal with General Motors Co. (NYSE: GM). The automaker would provide battery and fuel cell technology and build the Nikola Badger electric pickup truck in exchange for an 11% stake in the company. 

When he left the company as executive chairman in September, Milton agreed to vote his shares according to the desires of the board of directors and do nothing to seek to regain the board seat he gave up or support anyone for a board seat other than board recommendations.

Those assurances earned Milton a speedup of vesting in 600,000 additional shares of Nikola stock. In early June of 2020, Nikola’s stock reached its all-time high of 93.99 a share. With Milton owning 91,602,734 shares, his paper worth at that point was $8,609,740,968.66, getting him close to deca-billionaire status.

FreightWaves staffers Alan Adler and Brian Straight contributed to this report.

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Mike McAllister

Editor in chief Mike McAllister heads the day-to-day operations of the editorial team. Previously, he was the managing editor at, the official website for golf’s leading professional men’s tour. He also has worked in digital operations at ESPN, Sports Illustrated, and Golf Digest, and has been a staff writer for newspapers in Dallas, Austin and San Antonio. Email [email protected]