Milton was charged with two counts of securities fraud and one count of wire fraud. —Reuters
NEW YORK: Trevor Milton, the founder and former executive chairman of Nikola Corp, was criminally charged today with defrauding investors by lying to them about the electric- and hydrogen-powered truck maker.
In an indictment, prosecutors here charged Milton with two counts of securities fraud and one count of wire fraud over his statements from November 2019 to September 2020 about Nikola's product and technology development.
Prosecutors said Milton misled investors in order to drive up Nikola's stock price, become one of the world's 100 richest people and "elevate his stature as an entrepreneur."
Spokesmen for Milton had no immediate comment.
Nikola said in a statement that it has cooperated with the government and is focused on delivering Tre battery-electric trucks this year. The company was not charged.
In morning trading, Nikola shares were down US$1.20, or 8.5%, at US$12.99, after falling as low as $12.60.
Prosecutors said Milton's improper statements included that Nikola had early success in creating the "Nikola One" semi-truck that he knew did not work, built an electric- and hydrogen-powered "Badger" pickup from the "ground up," and had developed batteries in-house that Milton knew it was buying elsewhere.
Tesla Inc is among Nikola's rivals in the electric truck sector.
Nikola went public in June 2020 after merging with a special-purpose acquisition company, or SPAC.
According to prosecutors, the value of Milton's stock in the Phoenix-based company was worth at least US$8.5 billion soon after the announcements regarding the Badger.
Milton stepped down as Nikola's executive chairman last September, two weeks after short-seller Hindenburg Research labeled the company a "fraud" and said it made many misleading statements about its technology.
Nikola denied the accusations, but in February said a review by an outside law firm uncovered statements by Milton and the company that were partially or completely wrong.
"We commend regulators for acting expediently to protect investors and hold Milton accountable for his egregious lies," Hindenburg founder Nathan Anderson said in a statement.
Hindenburg issued its report shortly after General Motors Co agreed to supply batteries, chassis architecture, fuel cell systems and a factory for the Badger pickup, in exchange for an 11% Nikola stake and US$700 million.
The companies reworked that relationship last November, eliminating the equity stake and plans to build the truck.
US authorities have stepped up scrutiny of SPACs, which are a faster way than initial public offerings to take private companies public.
Critics say the process is prone to conflicts of interest and shoddy due diligence. US prosecutors are also investigating electric vehicle company Lordstown Motors Corp , which went public in a SPAC.