Milton, who stepped down from the company in September, is in federal custody after voluntarily surrendering. He’s charged with misleading investors from November 2019 until around September 2020 about the development of Nikola’s products and technology, according to an indictment unsealed Thursday by federal prosecutors in N.Y. The Securities and Exchange Commission also filed a complaint against him.
Read the indictment here
Nikola went public through a reverse merger with a blank-check company in June 2020. At one point, its shares ballooned to almost $80 apiece, giving it a market capitalization greater than Ford Motor Co. despite not generating any meaningful revenue. The company said it planned to make electric and hydrogen-powered vehicles.
Shares of Nikola fell 6.9% to $13.21 as of 8:44 a.m. in New York. Milton is the largest shareholder in Nikola. Data compiled by Bloomberg shows he owns about 20% of the company.
Among the false and misleading statements Milton made, according to the 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 inoperableThat Nikola had engineered and built an electric- and hydrogen-powered pickup truck known as “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 producedat all by Nikola, at any cost”That Nikola had developed batteries and other important components in-house, when they were buying them from third partiesThat reservations for Nikola’s semi-trucks 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”
Lawyers for Milton didn’t immediately respond to an email seeking comment. Prosecutors have scheduled an 11 a.m. press conference on the matter in N.Y.
(Updates with charges in fifth paragraph.)
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