Nikola founder Trevor Milton has been formally charged with defrauding investors after he lied about the company’s products and technology.
Prosecutors in New York this week charged Milton with two counts of securities fraud and one count of wire fraud, Reuters reports. The charges are related to statements Milton made between November 2019 and September 2020 regarding Nikola’s products and their capabilities. During a news conference on Thursday, U.S. Attorney Audrey Strauss said Milton “lied about nearly every aspect of the business,” during his tenure as executive Nikola’s chairman, which ended after he voluntarily stepped down from the role last September.
Milton had claimed that the company built a fully functioning prototype version of its battery-electric Nikola One truck, with the company even releasing a promotional video showing the truck apparently moving under its own power. However, a short-seller report published by Hindenberg Research later revealed the truck was nothing more than a rolling chassis and engineers had actually pushed the vehicle down a hill to get it moving for the promo video. Nikola also claimed it had developed its own lithium-ion vehicle batteries in-house when in reality, these battery packs were purchased from an outside supplier.
Milton’s lies were enough to convince General Motors to sign a memorandum of understanding with Nikola. Under the agreement, GM would receive a $2 billion stake in Nikola in exchange for various “in-kind contributions,” including technology sharing. GM later backed out of the deal, but then entered a memorandum of understanding to sell Nikola its Hydrotec hydrogen fuel cell systems for use in its future semi-truck offerings.
Spokespeople for Milton declined to comment on the criminal charges when approached by Reuters. The former auto executive, who is still worth an estimated $1.2 billion, was taken into custody Thursday and was expected to appear in court later in the day.