For Trevor Milton, the outlook for the success of himself and Nikola Corp. has reached its final destination. The founder of Nikola Corporation, a company that was would compete with Tesla has been indicted for misleading investors about the company.
On Thursday, U.S. prosecutors made public an indictment of Trevor Milton on securities fraud charges. The founder of Nikola Corp. had allegedly lied to investors about its business. The chairman of the electric vehicle (EV) startup has been charged with two counts of securities fraud and one count of wire fraud, by a grand jury. On Thursday afternoon, he is scheduled to appear at the federal court in Manhattan.
The indictment, which was unsealed on Thursday by the U.S. Attorney’s office in Manhattan, stated that Milton had “engaged in a fraudulent scheme to deceive retail investors” for personal gain. The prosecutors laid his elaborate public relations actions on social media as well as his fast talking appearances detailing products by Nikola, which has not even been manufactured by the EV startup.
The fast talker used several ploys to attract investors as the company went public with the help of a special purpose acquisition company (SPAC) VectolQ Acquisition Corp. He targeted inexperienced retail investors. Some of them lost hundreds of thousands of dollars by investing in Nikola.
The Department of Justice charged CEO Trevor Milton of false and misleading statements to investors between November 2019 to September 2020 in where Milton schemed to defraud investors into buying Nikola shares through statements about the company’s product and its technology development. All statements were found false and misleading to investors.
Last September CWEB reported, If the story about Nikola Motor Company founder Trevor Milton couldn’t get any worse, two women have now come forward stating that Trevor Milton, the founder of the startup company Nikola, accused him of sexual assault. On these allegations, Milton tweets “The focus should be on the Company… not me,” he said. “I plan to defend myself against false allegations leveled against me by outside detractors” and would be “cheering from the sidelines” for the company. Since that post Trevor Milton took down his Twitter account.
In previous news last year, CWEB reported Trevor Milton stepped down as executive chairman. Milton has also resigned from the company’s board, Nikola said in a statement. Again, he said, “The focus should be on the company and its world-changing mission, not me,” Milton said in a statement posted on Twitter. “I intend to defend myself against false accusations leveled against me by outside detractors.”
Nikola’s stock skyrocketed after the startup joined the Nasdaq through a reverse merger with a so-called “blank check” acquisition company in June. Shares dropped 35% in premarket trading on Monday.
The news could also spell trouble for General Motors (NYSE:GM), which recently took an 11% stake in Nikola and said it would produce its marquee hydrogen fuel cell electric pickup truck called the Badger.
Back in May we reported -CWEB Analysts have initiated a HOLD Rating for Nikola Corporation (NASDAQ: NKLA). The fundamentals of the company are strong but a staggering $120.2 million loss in its first quarter has raised some concerns. Second quarter will be the test for Nikola. If losses have decreased we can see a Strong Buy opportunity and positive cash flow.
Milton founded Nikola in 2015. He unveiled a first prototype of a truck and said that the startup would be the iPhone of trucking. He mentioned that the company would build and operate a plant in Arizona. He also mentioned that they would build Badger — an electric pickup truck. He stepped down from the company in September 2020, weeks after noted short-seller Hindenburg Research accused the company of fraud and the Securities and Exchange Commission (SEC) began an investigation into the charges.
The SEC, in a civil securities fraud charge asked the U.S. District Court of the Southern District of New York to permanently bar Milton from acting as an officer in any company that issued securities. It also asked the court to ask him to pay a fine and to forfeit all property that was linked to his fraudulent schemes.
On Thursday Nikola released a statement distancing the company from Milton. Incidentally, he remains the company’s biggest shareholder. The stock price fell after the news of the indictment was reported.
Nikola was down only 7.75% premarket after their founder Trevor Milton was charged with 3 counts of fraud.