Phoenix-based Nikola Corp. is trying to put some distance between the company and its founder and former Executive Chairman Trevor Milton after federal prosecutors on Thursday charged him with lying to investors in a bid to drive up the price of Nikola shares.
The U.S. Attorney’s Office in New York charged Milton with three fraud counts for allegedly misrepresenting various business operations. The grand jury indictment was unsealed Thursday morning.
Milton’s legal team responded with a statement declaring his innocence and calling the indictment “a new low in the government’s efforts to criminalize lawful business conduct.”
Nikola officials also issued a statement underscoring that Milton resigned last Sept. 20 and “has not been involved in the company’s operations or communications since that time,” according to a prepared statement. “Today’s government actions are against Mr. Milton individually and not against the company.”
Milton, 39, surrendered Thursday and was released on $100 million bail, according to media reports. He pleaded not guilty.
Nikola is developing zero-emissions electric- and hydrogen-powered heavy trucks, with trial production already underway. The company, which is headquartered just south of Phoenix Sky Harbor International Airport, is building a state-of-the-art manufacturing plant in Coolidge on former farmland. It also has started vehicle production at a converted factory in Germany.
Despite the arms-length statement, shares of Nikola fell by $2.16 a share Thursday, closing at $12.03.
False statements on trucks
The federal indictment charged the Utah resident with making false and misleading statements to the public. He could be forced to forfeit assets linked to the company’s public stock offering in June, which catapulted Milton into the billionaire ranks.
“As alleged, Trevor Milton brazenly and repeatedly used social media and appearances and interviews on television, podcasts and in print to make false and misleading claims about the status of Nikola’s trucks and technology,” said Audrey Strauss, U.S. Attorney for the Southern District of New York.
The statement from Milton’s attorneys — Brad Bondi, Marc Mukasey and Terence Healy, all with different law firms — said he was wrongly accused following a “faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses.”
They described Milton as an entrepreneur with a long-term vision of helping the environment by cutting carbon emissions in the trucking industry.
Many of the allegations were first made by Hindenburg Research, a short-selling firm, including an assertion that Nikola filmed one of its trucks driving down a remote stretch of highway without disclosing that it was coasting downhill rather than running on its own power. Another charge asserted that the company’s announced sales agreements with various buyers were exaggerated.
The Nikola statement said the company has cooperated with the government throughout the 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.”
From dropout to billionaire
Milton, a flamboyant college dropout, burst onto the Arizona business scene in a much-ballyhooed introduction in January 2018 that included statements from Gov. Doug Ducey, Valley sports mogul Jerry Colangelo and other luminaries.
After the company sold stock to the public, Milton’s net worth briefly topped $6 billion and he purchased a $32.5 million estate near Park City in Utah’s priciest home purchase ever.
But he eventually was forced to resign, and Nikola hired new management with ties to the traditional automotive industry after the Hindenburg allegations surfaced.
Nikola currently has about 700 employees in Arizona. Along with other zero-emissions manufacturers including Lucid Group, the company is seen as a key part of Arizona’s emergence as an automaking center.
Reach the reporter at [email protected].
Support local journalism. Subscribe to azcentral.com today.