A federal judge denied a motion by Nikola Corp. founder Trevor Milton’s attorneys to move his fraud trial out of New York, saying he bought and sold shares on the New York-based Nasdaq, making the venue appropriate.
Milton is charged with three counts related to allegations that he defrauded investors in the startup electric truck company by making false statements. He is free on $100 million bail pending a trial scheduled for April 4, 2022.
Milton claimed he should not have been charged in New York for securities fraud and wire fraud because his alleged illegal behavior occurred in Arizona, where Nikola is headquartered, or in Utah, where he lives. His attorneys plan to challenge the indictment on other grounds besides venue.
U.S. District Judge Edgardo Ramos said Milton, 39, could be tried in New York if he traded Nikola stock on the Nasdaq and communicated false statements to that state.
Milton’s wife ailing
Other factors support keeping the case in New York, Ramos said, despite Milton’s desire to care for his wife, who according to court papers cited by Reuters has an autoimmune disorder and other “severe” health issues.
Attorneys for Milton, who could not be reached for comment, call the indictment “legally deficient” and plan to seek a dismissal on substantive grounds, Reuters reported.
Milton, who made heavy use of social media — particularly Twitter — to make claims about Nikola’s technology achievements and prowess, was charged with fraud on July 29.
The case focuses on Milton’s assertions that Nikola had built an electric- and hydrogen-powered pickup truck, which had never been seen other than in photos; developed batteries Milton knew the company was buying elsewhere; and was making progress on a truck prototype he knew did not work.
Nikola in final phases of SEC talks
Nikola as a company has not been charged with criminal wrongdoing. It is in final negotiations with the Securities and Exchange Commission on a $125 million fine related to Milton’s claims. Nikola has said it will seek to have Milton, who remains the company’s largest shareholder, reimburse the cost of a settlement.
Milton founded Nikola in the basement of his Salt Lake City home in 2014 and moved the company headquarters to Phoenix, where it expects to have 1,000 employees by the end of the year.
Milton left the company in September 2020 following a scathing report by short seller Hindenburg Research. Some of the allegations against Milton in the 67-page report were later found to be factual during an internal Nikola investigation.
Nikola (NASDAQ: NKLA) has begun pre-series production of a Class 8 battery-electric daycab expedited to go into regular production in Q1 2022. It also has built early versions of a hydrogen fuel cell-powered version of the truck.
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