Mopar Insiders Forum

Register a free account today to become a member! Once signed in, you'll be able to participate on this site by adding your own topics and posts, as well as connect with other members through your own private inbox!

Why companies must tell truth with EV presentations: Nikola Founder indicted

AlexB

Well-known member
Joined
Jun 7, 2018
Messages
2,000
Reaction score
1,331
Nikola Corp. founder and former chairman Trevor Milton has been charged by prosecutors with making false statements to investors in the electric-vehicle startup. The charges follow a difficult year for the company, which went public and almost immediately faced questions about its production and technology.

Milton, 39, who stepped down from the company last year, is charged with misleading investors from November 2019 until around September 2020, according to a criminal indictment unsealed Thursday by federal prosecutors in New York. He voluntarily surrendered to federal custody and was freed by a judge on $100 million bail after pleading not guilty. The bail was secured by a 2,700-acre ranch in Utah owned by Milton, who promised to limit his travel and not to contact investors.

In order to drive investor demand for Nikola stock, Milton lied about nearly every aspect of the business,” U.S. Attorney for the Southern District of New York Audrey Strauss said in a press conference.”
Nikola’s sudden rise and dramatic fall kicked off a trend. Other startups including Lordstown Motors Corp. and Canoo Inc. have gone down similar paths, merging with special purpose acquisition companies and then struggling to hold up to scrutiny after going public.

Dramatic Fall

Nikola went public through a reverse merger with a blank-check company in June, in a deal that made Milton into a billionaire several times over. At one point, the company’s shares ballooned to almost $80 apiece, giving it a market capitalization greater than Ford Motor Co. despite not generating any meaningful revenue.

Days after the startup’s shares debuted, Bloomberg News reported that Milton had exaggerated the capability of the company’s debut truck, the Nikola One. That story got the attention of an activist investor at Hindenburg Research, which published a detailed report in September accusing Milton and Nikola of deception.

Nikola initially denied the claims by Hindenburg, which was betting against its shares. But Milton resigned later that month, and in February the company said an internal review of claims about its technology concluded the startup and its founder made several inaccurate statements. Hindenburg congratulated investigators for holding Milton accountable for his statements in a tweet after he was charged.

The fallout from the accusations has forced Nikola to curtail its ambitions. A deal with General Motors Co. to build a pickup collapsed, and an electric garbage truck program with Republic Services Inc. was cancelled.

Nikola’s market capitalization has plunged from almost $29 billion in June last year to about $5 billion currently.
The SEC says Milton was “intensely focused” on the company’s stock price, calling and texting senior executives to “do something” on days when the shares were falling. He also “tracked the daily number of new Robinhood users who held Nikola stock,” according to the complaint.

Gurbir Grewal, the SEC’s head of enforcement, said Thursday the case was about the obligations of corporate officers to provide complete and accurate information about their companies’ operations. “Corporate officers cannot say whatever they want on social media in violation of federal securities laws,” he said.

Around the time of the merger, Milton tweeted about a battery-powered pickup called the Badger -- a truck the company had said in regulatory filings may not make it to production because it lacked a manufacturing partner.
Milton also used his social media presence and appearances in interviews to announce new initiatives and changes, before informing the company, the SEC alleges.

“For example, on June 25, 2020, Milton sent a series of tweets from his personal account in which he claimed that Nikola would offer a drinking fountain in the Badger. This information came as a complete surprise to Nikola’s designers, engineers, and marketing personnel. When informed of the tweets, one engineer questioned whether ‘this [is] a joke,’ a marketing employee wrote that his ‘head is fuzzy,’ and a designer texted, ‘hhhhh what.’”

Among the false and misleading statements Milton made, according to the federal indictment:

That the company had a “fully functioning” semi-truck prototype known as the Nikola One, despite the fact that Milton knew that the prototype was inoperable that Nikola had engineered and built an electric- and hydrogen-powered pickup truck, the Badger, from the “ground up” using Nikola’s parts and technology, which he knew was not trueThat Nikola was producing hydrogen and was doing so at a reduced cost, when “no hydrogen was being produced at all by Nikola, at any cost”That Nikola had developed batteries and other important components in-house, when they were buying them from third parties That reservations for Nikola’s vehicles were binding orders representing billions in revenue, when they were actually able to be canceled at any time, “and were for a truck Nikola had no intent to produce in the near-term”
 

Deckard Cain

Well-known member
Joined
Oct 8, 2018
Messages
702
Reaction score
539
If you barely followed the EV sector you could tell that this company was a scam from the beginning.
 

Users who are viewing this thread

Top